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r?ipu<4lutlou (to nqm?, that uticli dohiy will '>?? Incurred aa will niako tho accumulated dobt no largo that thoro will bo uu indisposition U> touch It, that non action will lend to liuul refusal to pay. I earnestly hopo Hint this wilf not bo tho case, but I feel it tuy duty to sng\ goat tho danger. It would bo beet for nil par ties lo look the difficulties squarely in the face, and utako a full uud thin) settlement, by > .in verting all tho outstanding issues into a con solidated debt, upon which tbo interest would be paid without failure. In my opinion tbo creditors would bo willing to accept auch an issue iu satisfaction of their claims, provided too great u loss should not bo indicted upon them; and certainly, in viow of tho constitu tional obligations, us well us regards the honor nnd good name nnd tho material interests of tho State, the General Assembly ahould moct them half way. ***** Wlien such ilnal adjustment shall be made, it will no doubt bo supported by the good men of all partios, and will bo acquiesced in by the poople." l'l.A N OF AnJUSTMEXT. It is a well established principle of political economy that an individual having money to invest will make nn investment iu that class of "securities" which offers the best guarantee of safety?securities which will not only pay n premium upon tho money invested, but which may be disposed of, without loss, whonevor a change of Investment is desired?in oilier words a marketable security. The value of a Stalo security depends largely upon tbo confidence of tbo purchaser in the good faith of tho State, but moro especially upon Iho menus which tho State places in the h aids of ovory holder of her bonds, to compel dl? punctual payment of tho interest aa it accrues, and tbo principal at maturity. Tbo Stalo is soveroign nnd cannot be sued; but when she enters into a contract with an individual, through her agents, and directs said agents to perform certain duties in fitltlllmeut of that contract, such individual can compel tbo agents of tbo Slate lo execute tbo will of the State us expressed in such contract. Thus, in three-fourths of iho States, when ever thu financial oflicers aro authorised to croato debts by tho issue of Slate obligations, tho machinery for the punctual payment of tho interest and principal is provided as a pHrt of tho contract; and ovory individual who accepts such obligations in exchange for tho inouoys bo ndvuucos, receives u remedy? of which tho obligations themselves are the evidence?for every neglect of duty in tho premises on the part of the agents of the State Such an obligation offers tbo best investment that could possibly be made, inas much as the holder thereof has n lien upon tbo entire properly of the citizens ol the State. How is it with the liondod debt of this State? Our dobt ma)' ho divided into three classes. Tho first class includes all those bonds, (ori ginally Issued,) of the (Ivo classes enumerat ed in the decision of the Supreme Court upon the Morton, Bliss and Company mandamus case, amounting to $3,549,000, Tho second class Includes nil those bonds and stocks whose only guarantee (or the pny meut of principal and interest is the good faith of the State. This class comprises the old bonds and stocks, (except Blue Kidgc bonds.) the bonds for funding past duo interest and principal, and funding bills Hank of the Stale, und amounts to $4,513.G03.:tf?. The third class nre those for which no pro vision has been made for the payment ot' _l?'-??-?-? ?, ..?.?,. ,.-?- ?nin i>.w, and includes tho Blue ltidgo bonds, (tho ab sence of the guarantee in this instance being probably an oversight,) und tho conversion bonds issued directly by s.-.le or hypothecation. This class aggregates $0,905,000. This concludes the his.ory of the character of our bonds. I<et us now enquiro their pres ent market value. Our " January und July bonds," old and new, which comprise the entire amount, ex cept $2,189,000 of " Aprils and Octobers," are quoted at fifteen cents. The latter, being u portion of those recently lieforo the courts, are quoted at twenty-three cents. Now it is evident, from the arguments pre viously advanced, that the Stute is unable to pay the interest upon tho debt us it stands, und that it is to tho interest of every bond holder that tbo debt bo reduced iu volume to a reasonable limit, so that tho pnymouc of interest may be resumed. If, when the hold ers of our bonds ami slocks agree to surrender them for n new und consolidated bond or stock, iho Stuto agrees as a part of the contract (of which such bond or stool, itself would bo tho evidence) to provide for tho payment of the annually accruing interest and for the extinguishment annually of u por tion of the principal until tho whole shall he thus redeemed; if, iu pursuance of such agree ment, she instructs her agents (whoever may represent her fioru tho date of the contract until the debt ia entirely extinguished) to levy and collect annually laxes sufficient to pay said interest and retire a |>orlion of the said principal?if she instructs her agents as aforesaid to disburse the funds so collected to the purposes aforesaid, aud if embezzlement or diversion ot aatd funds be made a felony, pun ishablo as the constitution directs, it is evident that it would be to the best iuterest of tbo bondholder to accept willingly such n compro mise. For if these remedies be placed in tbo hands of every bondholder it is evident that while bis new bond would represent upon its face a sum equal only to two-thirds or one-hail the face value of. his old bond, the market valuo of the ucw bond would undoubtedly be from one-third to one-half greater than the present value of the old. For instance, if- $3,000 of old bonds worth 16 centil on the dollur, or $450, bo exchanged for $2,000 iu now bonds wo.-th at least 40 cents on tho dollar, or $800, the holder will have made a clear gain upon the actual vnluu of bis bond of $350; and again, if $3,000 in old bonds worth 23 cents on thu dollar, or $690, be exchanged for $2,000 iu new bonds worth at least 40 cents on the dollur, or $800, tbe holder will have mudo a clear gain upon the acluul value of his bond of $110; and in addition thereto, tho payment of tbo interest and redemption of the principal of his new bond will be amply secured by remedies in bis immediate yost-cmion. Before' proceeding lo discuss the details of this plan of adjustment, it may be useful to examine tbo history of tho different States, and enquire whoiher they or any of them wore not at some period burdened with dobt even as South Carolina is to-day; tbo method adopted to relieve themselves of that in debtedness, and tbo practical operation of auch method. The Stale of Indiana failed to pay tho in terest upon bor public debt from 1841 to 1847, during which time she acquired n re putation lor bankruptcy and repudiation, from which she ouly recovered after years of deter mined effort and the fuithful discharge of her obligations. Llko most of tho Woatern States at that time gigantic Scheines of interunl im provement, schemes for subscribing millions ' of State bonds to build cumin mid railroads for the dovolopmont of tlio great West, wero rushed through tho Legislature without the slightest consider,it ion of their feasibility. And in Indians, as in mostofhor sister sin ten, these bonds wore hypothecated nnd sold for n mere song. The Utopian sehomes of developing the resource!, of the State vanished into thin air, and the railroads and cauala could be found only in the buncombe speeches of their advocates. lo.i ill') ill. it* ?Ol -six Mm and Er It; |i| 1840 tin' i.oo&lo rpailsud their true i dilioo, bin nut before ttu-v had !.?>?<??) Imrdfj with n debt ofSH.Opo.ouii, b.riili'.i ti.i v.st which hull Imen ucenmnl itii years. The tut? thou nude a with her bondhnMeis, iu which she transfer her titio tu the Wnbash (Jamil iu llqtlidotioti of one-hall of hor ilcbt uinl to issuo eoriilieitos of Block, bearing flvo , per cent, interest ullcr 1854, for the other liajf. The-Legislature solemnly pledged tlio folth, and fuuds of tho Slate for tlio punctual pay ment of the interest aud principal; mid afterwards solemnly set apart All tho revenues of tho SUito derived from taxation for general Slato purposes, after the defraying of the ordinary expenses of the government, to tho payment of the interest and liquidation of tho principal of the dobt. This compromise and coutract was afterwards confirmed by tho people at tho ratification of Iho ''New Con stitution of 1850." Even tho old creditors of the Stato who wore uot directly interested in these schemes and held H0?0 of these questionable bonds came forward uriilitujly to relieve iho Stute of tho foul stain of repudiation, uud mado sacrifices of their pecuniary interests which made the compromise possible. And now, by tho faithful performance of the terms of this compromise, her credit has been completely restored, and .stands ution u perfectly secure basis ; nnd without oppres sive taxation her debt is being very rapidly extinguished. Tho history of the finances of the Slat? of Michigan furnishes another illustration of a compromiso effected between a State and her creditors. Tho con promise mado by tho Stato of Indiana was mado at the suggestion of the landholders and with their hearty assent and co-operation; that of tho Stato of Michigan was made without agreement, which the bondholder was obliged to accept or get nothing. Her financial troubles began iu 1840. Tlio favor for issuing bonds to build railroads mid canals raged ul that time us an epidemic throughout the entire West. Like a prairie lire or a swarm of tho dreaded caterpillar passing over a cotton plantation iu the South, its appearance was us .sudden, its march as rapid, its desolation as complete. In 1837 and is;i8 Michigan issued $5,200, 000 lo build canals und railroads. The l*ov ernor mado urrangumeiits with a bunking company to act as the agents of the State in the negotiation of the IkiiiiIs. The company negotiated a portion ol* them and made the proper returns to the State; tho moneys were payable iu installments. The State was euti lied to receive about $2,867,030.76 on tho remainder of bonds iu hands of tho company, when suddenly il collapsed, und it was dis covered llial the whole amount of bonds bnd been hypothecated or sold, had passed into the bauds of innocent partita, and were out standing as n charge against iho State. Tho Governor publicly called upon tho holders of the bonds either to pay tho balance duo upou them by the company or surrender llietn und have the amount they paid for them refunded. The legislature of 1S41 confirmed the action of ihe Governor and again demanded iho sur render of tho bonds upon tho terms before mentioned. A portion of the entire sum of $5,200,000, iiinouuUug to $1,887,000, were uot included in the demand lor the reuson previously given. The bondholders refused to accept the com promise and no further action was taken until 1S46. At that time (March, 18-10.) the State sold her railroads and received as part pay some of iheso nnrt-nnid bonds. jaTSunin ?)??? jmuutrrai at mo rate ol $403,88 per $1,000 iu bonds, aud tho interest at the rale of aix per cent on $302.73 for each $1,000of said bonds. In 1855, iho Legislature directed the trea surer to notify tho holders Of said bonds, by public advertisement, lo surrender their bonds Within six mouths, as after that time no in ter si would lie paid. Tho six uiotillis expired August, 1855, nnd from that lime the bonds have been adjusted at the rate of $578.67 for ouch $1,000. There are still outstanding $54,000, udjuslublo nt $31,242 78. Under the operation of wise legislation, ample provision having been mado for ihe payment of the Interest and extinguishment of the principal, by solemnly setting apart a portion of the uuiiuul rcvQiiuo uud the levying of n spociflc annual tax for that purpose.?tho credit of the Suito has bceu completely re stored ; tho resources of the State tire lurgo and annually increasing, while the debt is small, taxation light, und no occasion to mako it oppressivo. Tho auditor-general iu his re port of September, 1871, states that Iho sink ing fund was largo enough lo furnish the moans of redeeming ull tho bonds outstanding liefore their maturity, if the holders could be induced to surrender them, und the Governor) therefore, recoroinoi.ds il o repeal of tho act levying a specific tax for that purpose. The history of tho linances of the ?Stylte of Illinois is worthy of especial notice in tins connection, us in several respects she passed through a similar experience lo our own. Tlie success which rewurdnl that bund of patriots who combined to restore the credit of tho Stute, and to lift the cloud of suspicion of re pudiation which rested heavily u|hmi her, might well furnish a lesson to the citizens of: this Stale w ho have her best interest nt heart. Tho financial troubles of Illinois occurred prior to tho adoption of tho constitution of 1848. Sho hud neglected for a long time to pay tho interest upon her debt until tho prin cipal mid its iuterest accumulations amounted to tho enormous com (so considered at that time,) of $18,000,000. Parly lenders im peached the validity of the debt, and recom mended that the people refuse lo provide for its payment, whilo tho tux payers relieved from taxation lor one purpose, vigorously op posed paying any taxes st all. The distress ing condition of tho lluuiiccs is fitly portrsyed in the report of the auditor of ll.v :'*mU> of December, 1870. Said he : "To those who can remember the condition of Ihc State of Illinois in 1847, iho treasury empty, the Gov ernor borrowing money upon his own credit |0 pay iho postage on the loiters written on the business of the State, her bankruptcy known ami sneered at nil over tho world, even her honesty of purpose doubted, ami some ol her own sons trying to bring her to tho infamy of repudiutiou; tho simple slute ment of these fuels requires no comment to mako them Impressive. Who can not see that at least in tho cast- of Slates and nations honesty is iho best policy." Tho legislature by net of February, 1847, authorized the refunding of the Slate debt: tho preamble of said ucl is quoted here, as it shows iu a iiui-shcll tin oxact condition of Ihe dobt. " Whereas Iho Stole of Illinois has at. vari ous times issued u Inrge amount of internal improvement bonds of various classes, yet heaiing the same numbers, and having inter est coupons thereto attached similar m ntim bor and description, thereby causing* great ronfuaion nnd opening a wido door for fraud, and rendering It extremely difficult to pay tbe interest to those justly uniilled therein; aud whereas, also, from a want of a full uud per fect reeird of the classes, nnmliers, and de scription of the bonds so issued, il is impossi ble at ihe present lima to determine the pre ciso amount of the indebtedness of tho State, its chiirnciar, und when payablo; nnd whereas, it is of tho highest importance that the actual amount and character of tho present State debt should b.. accurately ascertained o4 the earliest possible period, preparatory to a more united and vigorous exertion for its payment, and to onable tbe Convention for altering tho constitution (shout to assemble) to make some a^tHUjato^r^slIuitlaunl nrVMpn 4or Ihfvpay. A locnaif Ahuu-ibcifW wVoiMiuo, Im Mcop'in^ interim u^??c ii"<??car; lliorolpic," R Undflr alii*_u<*t tnm er^raWctJt wastttiuj c-il, i'-ccep' certain bond- und ?prip ku.ii.wti a& tho Muenlistcr ami ritebbins botids mal scrip, canal bonds, and oilier evidences of indebtedness of tlio Illinois and Michigan oannl. New in'.erual impiovoiueul scrip \\ d for tho old dobt, Onunl b) noiotiiit und bearing like interest and payable at tho name tiuio us (ho bond or i-crip surroudwred. Tho "Mnculistor and Stcbhins h<;uds and scrip" amounted Ur $!) 1.1,215.44. They tattoo* into the possession of said linn as the agents of the State. Tho State roe. ved for auitl amount $261,560.83, or about 28 C4-100 cents, I whereas they wero entitled to receive aceo'd- | ing to agreement about 40 eents on the dollar* Tile firm refused to pny the balance, nnd the I.ogislatnro iu February, 1849, In structed the Governor to compromise tho matter by offering to fund tbo amount uctually advanced upon the bonds with 7 per cent, interest, from tho dato of the udvnneo to the time of funding; and notwithstanding these bonds had passed into the hands of innocent holders, the Statu refused to recog nize any further liability upon them, except to the amount of 26 cents on tho dollar with 7 per cent, interest. This arrangement was acquiesced in by mnny of the holders I and most of the Ikiu.Is luive been funded nt said rule. Tho constitutional convention of 1848 submitted to the people the following amend ment, which was rntitlod by n large majority of votes: "There shall be annually assessed nnd col lected, in the same manner ns other State revenue may be assessed and collected, n tax of two mills upon each dollar's worth of taxable property, in addition to nil other taxes, to be applied as follows, to wit: The fund BO Crouted shall be kept separate, and annually on the llrst of January, be appor tioned and paid over ]>ro tutu, upon all such St ite indebtedness other than tho canal and BChoOl indebtedness, as mny for that purpose bo presented by the holders of the same, lo be entered as credits upon nnd to that exto.it iu extinguishment of said indebtedness " The lirst lax under this provision was col lected in 1849-60; the credit of the State immediately revived, and iu IH52 the State entered ii|*>u an era of prosperity unprece dented iu tho history of any other Stute of the Union. This feature of the Constitution operated beneficially to the tax pawns m a manner entirely unforeseen. As Hie Stalo grow in wealth tho two mills tax. the collection of which Wim imperative, bejran to realixo n larger mini than the State could annually apply to Die extinguishment of the debt, nu the holders refused to Flirrender so valuable a Security nutil compelled to do so by its ma turity. It became necessary, therefore, in order to avoid the collection of an umount of "money under this tax iu excess of whnt could bo actually applied yearly lo the extinguish ment of the debt, lo reduce the valuation of pro|>crty as low as possible. The State audi tor, in his report lor 1869, estimated thelaxu bio property of the State to bo assessed at twenty-live percent, or oue-fuurlh ol its actual value. The last levy under this provision of tho constitution >>f 1848 was made in 1870. The moneys now on band, together with the rev enue from th?? Illinois Central Railroad, will be murrt lh?..i?i..;.>..? ??_?l ?|,? r-iiliia indebtedness at maturity, which amounted oii Uiu3lt?i dav of December, is,2, Iu $2,060, 150.03. The foregoing illustrations are sufficient to show tho manner in which several of the. States got into debt, the means I boy used to extricate themselves, ur.d wild what BUeoSSS. Tho lesson they teach is too plain lo require comment. Having looked ut (hat picture, let us ex amine this : Tho Stale of Minnesota, in 1650, authorized tho issue of $5,000,000 of bunds in aid of cor | ton railroad enterprises. The roads woro not I built, but the bonds were disposed of. The State refused lo recognize tho validity of the debt or provide fur the payment of interest or principal. They have ueeu practically re ' pudialed for fourteen years. The bondholders have made rcjainled efforts to effect n compromise, but each and evory etfort has been unsuccessful. Tbo present treasurer, however, states that bo de urea the matter to bo settled und is en quiring as lo the liest method of udjnstineiit. From iho rc|s>rt of the comm.lieu ou tin nnce of tue constitutional eonventiou of I.SC8. of the Stair of Arkansas, it appears that said State hud virtu mVjV repudiated her debt for I thirty years. In reply to tho question '? What is tho present valuo of our Stale bonds," the cominitteo reported "Thai the bonds of tho Slate of Arkansas nre not quoted in the market ot any city of Iherut ffeed xoorld, 'This is attributable to tho tact that iu a p nod of tuuily ?ihhj years, the State authorities have not provided for the payment Of interest on her bond*. A system of liiuincioring known only to thieves nnd robbers without conscience pie vailed to such an extent that their operations now cost the Hlato the neat little sum of $5,104,001.10. Not content with impoverishing tho Slate, dusolaiing the eountry.nnd causing mourn ing at every hearth stone, we ii:el these self-same nioii arrayed in hostility to tbo present reconstruction measures, hoping thereby to bide from tho public gaze mid investigation, tho plunder and thefts of thirty years 1 * * * * For years thu levy of tho State tax was light, the people thought tho government was well nnd economically managed, by letting lite bonds run for years without paying any in-, tercet, und not seeing any appropriations for the puymout of interest un those bonds in tho dTsburseuiQnt of Iho publio fuuda, it is nt l strange thai they forgot tho iiidobt edncsi of a prior generation." It it piupor to mid that the State authorities referre I to, who were re?|HinsiWe for that dobt, I flanged to tho Democratic party. The reconstructed government Iihs recently mado provision for thu funding of tho debt, hoping thereby to restore tho ctedit of thu State. Tho Slate of Virginia llMS not pnid all the annually accruing iliteiest of her debt for years, audit is only recently that the public hove been made aware that the volmno of debt lias been largely uuginuliled by the ac crued inietest, Virginia has been under a Dernocraiio administration for years, and, like the lows which control the animal aud vege table kingdom, the nearer iho debt spproachca maturity the larger it grows. It is strange indeed I hut those who created nnd controlled the debt, and who atill buhl the reins of government, bavo made such in adequate provision for the payment, both ol interest and priuoipnt. The debt of Virgiuin is roported to be, in round numbors, $17,000,000. The Ivy dnltire, pension 1871-72, provided for the nt of 2 pet centum of iulerost upon i.o:..i , ntitled to 0 per centum of in terest, and lji per centum of interest upon bond.: entitled to 5 per centum. Un* is tho host ihey havo done in defense of the llnan ciul honor of tho Stale. Sullieieul bus boon written "In point a moral." Let ns now roltirn from tlio study of the conduct ami management of the debts of other States to the point wbeuce we atartud, vh?.: thp adjustment of our own debt. Governor Orr, iu bis annual messago ts tho Is^ialxttiip (seeslonSjf ???OjThnis'ffii yAtlMlow? iitKrulpirlutmduliouK it?tit<{f|rd to'tl%public "It is, however, eminently proper th-.it Bo'titu linuuoiul scheme should ho now udoptcd to prepuro tlio titute to meet the pritiuipul of tho dobt ub it falls due. If tho iutcrcet is regularly paid ou tho debt, $100,000 anuually get apur<: as a sinking fund for twenty years,, invested in side sejuritios yielding six per tent, per annum, tlio principal being further iucreased by tho ir.veslmout of tho interest annually accruing, will accumulate the sum of $,?".,899,312, which will bo nearly adequalo to the payment of the entire debt then duo; und I recommend that proper legislation bo adopted nt tho present session to inaugurate this scheme. "Under tlio act of September, 180G. provi sion was mado to fund the interest on stock issued under tho authority of tlio uct of 1003. to continue the construction of tl\o near Stato House ; the whole amount issued was $24,820. Tho issue was not mado until some time during tho year 1804, when tlieru was a heavy depreciation of tlio currency and when labor and iiintcriul wore in a cor responding degree .appreciated; $100,000 were issued in 1802 under authority of tho act of 1801, when labor und material had npprecinted very little. In my proclamatiou I I excepted theso two issues from Imroodiato funding until the General Assembly mot and i determined whether theso stocks should bo j scaled lo tho real vatttf received by the Stato I for thorn when issued. The convention adopted a nilo for tho govornmcnt of trans actions between individuals during this time, which was just and honest, nnd no reason is perceiviM why tho wuuo rule should not be applied in transactions between tho Statu and its creditors." Knau tho above, it appears that Governor Orr acknowledged that no provisions had been made (or the payment of the principal of tho public debt, and realized tho necessity for. and wisdom o'", making Immediate pro visions therefor. Ho also coticoivcd it to bo just and projMT to scale u |?o:tioti of the public debt, and took the responsibility upon himself to exclude them from the lieuellts of tbe funding acts, until the Legislature might meet uud take action thereon. While it is true that tho legislature dis regarded his recommendation*, every one will admit their soundness. They are quoted hero for the purpose of showing that a precedent has been established for the recommendations which lollbw. I recommend; First. That all the bonds of the Stato fur j which the Stato is actually liable, less $38,000 I Stato capital bonds of 1853 past duo, to bo otherwise provided for, be scaled in the fol I lowing manner, lo wit: I That tlio State treasurer be authorised, and instructed to rc-eive from the holders willing to surrender tho same all the bonds and stocks of the Stato previously issued aud now outstanding ngainat tho Slate, (not including tho Stato capital bonds In-fore referred to,and bonds known as " Con version bonds" issued directly by snls or hypothecation, the uuuiliers and denomination uf which will more fully appear by roforonce to th? treasurer's registry of bonds nnd Mocks converted, or issued directly, amounting to $6.965,000,) and shall thereupon iu exchaugo for nnd in lieu of said bonds or stocks so surrendered, issue to said holders other bonds or certiticatea of Block, ns they mav desire, equal in nmouut to of tho face value of the bOndd or slocks so cti tcnUeicil. Tluit the Sta'te treasurer be uiitliori/.ed nnd instructed to receive from ihe holders willing to surrender the same, all the bonds of the Stale, known as "Conversion lionds," issued directly by sale or hypothecation, the uumbei aud denomination of which will fully appear by reference to ihe treasurer's registry of bonds uud stock converted, 'ami issued direct ly, uud shall thereupon in exchange foe and in lieu of such bonds so surrendered, issue to said holdors bonds or certillcales of slock equal iu amount to-of tho face value of tlio bonds so surrendered, aud no liability on tho prut ol tho Stato is recoguized further than is heroin limited and expressed. That the Stato treasurer be authorized and Instructed W rceeiro from the holders willing to surrender tho same, all the coupons upon the bonds before moutlotio I, which have ao erued or will accrue on tho 31st ol Octobor, 1873, and tho interest orders upon interest duo upon cortttleutes of stock us aforesaid lo tho dute aforesaid, and shall, thereupon, iu exchange for and in lieu of such coupons or iutero-t orders so surrendered, issue to said holders, bonds or certificates of stock euual in amount to -?- of tho fuce value of ? ho coupons or intoresi orders ao sur rendered ns followsi Coupons and interest orders of the principal of bonds and stocks scaled at - to bo scalod in the same proportion, and coupons and interest orders of tho principal of bonds scaled at ??? to be scaled in tho same proportion. That the Stato treasurer be instructed to receiva from tho holders willing lo surrender tho same nil the pay certificates, bills payable, scrip, or other evidence of Stato indebtedness outstanding against tho State ou tho 31st of October, 1873?exempt appropriations puyablo us deficiencies?and shall thereupon, in ex change for and in lieu thereof, issue to said holders honds or certiticatea of stock equal in amount to-of the theo vahio of tnu pay certificates, bills payable, scrip, or other evi dence of State indebtedness so surrendered : Provided that no liability to pay tho aforesaid pay certificates, bills payable, und scrip or othor evidence ot Stato indebtedness is recog nized other than is herein limited und ex pressed. S ?. .ml. Tho bonds and certificate*, of stock herein authorized tobe issued shall bear upon their fuco the words "bonds aud certificates of stock." and shall also bear upou their face a declaration to the effect that tho pnymeut of the interest is secured by tho levy of au uiiiiu.il tux, and tho redemption of tho princi pal is likewise secured by a sinking fund pro vided for tho purpose, which declaration shall be considered a contract ontered into between the State nnd evory holder of such bond or stock. Said bonds nnd stocks shall be signed by tho ??, countersigned by tho -? aud have tho greal seat of tho Stato affixed thereto, nnd ihere ahull l?e preserved in tho offices of the secretary of Stato and Stale treasurer, a description of tho amounts, dates, and time of issuing said bonds, aud tho bond.- and scrip so taken up shall be cancelled by tho treasurer, and a list of their dates, numbers and amounts, and by whom signed recorded hi the offices of tho Stato trea surer and secretary of State Third. That the faiih, credit nnd funds of the State be solemnly | lodged for tho punc tuul payment of tho interest, aud final re demption of the juiiicipal of said bonds .md stocks, and for providing a sinking fund for that purposo. Fourth. That there shnll bo nnnur.lly levied and eolloctod, from until the bonds and stocks herein authorized are extinguished, principal nnd interest, in the same manner and ut tho ranio time the gene ral Siato taxes nro loviod and collected, a tax of-mills npon tho dollar of each hun dred dollar's worth of taxable proporty in the State, in addition to all othor taxes. 'I hai the fund so crcntod shall be kept separate from nil other funds und shall bo applied: Firat, to tho payment of the annually accruing interest upon the bonds and stocks hei em authorized. ????^'??^.V^. -:-:-' |<H?y<<i. .11.0 Hiii|.imi of auH ftjjttd* ruiAlu.' In;, in the jrewury. ;?rVr Um payment oi tic said interest i?i n'i''b.i ,\'p'jv'! oil or V: ''V t)?o ,- of each teuV'l'> Uiecxti^iii? incut of tlio principal of If* turbid ?:Xbl,H? follow., ? * ? The -,-, -, ?-.-Mid ???, shall constitute a board of comniib aionor* for the uiauugomout and control of the snid surplus fuud fur llic extinguishment of tlio public debt. Tho said board shall give uotico by public advertisement for thirty days prior to the of ?? of ?ach year, that they huvo under their control the sum of -dollars to be applied to tho purchaso of such bonds or stocks us may bo presented lor payment by the holders thereof, on tho-of-, us aforesaid ; provided, that said bonds bo par ch used at a prico not ubovo their market value at the lime of purchaso, said value to bo nseor taiucd from the principal stock nutrkets of the Unitod HtHles. Third, that tho bonds and stocks so re deemed shall be immediately cancelled by tho treasurer in the presence of tho taiard, and bo entered us credits upon and to that extent in extinguishment of the public debt. That a detailed statement of the number, denomi nation and series of the bond- and stock? so redeemed and cancelled, together with the prico paid for euch l>oud and stoek. as afore said, shall l?o prepared by the treasurer, signed by the board and furnished to the General Assembly ai the ooTiimcilWiijeut of oach annual session thoieof. That embezzlement or diversion of said funds, whether directly or indirectly by speculating in said bonds, or purchasing them at fictitious prices, bo made a felony punish able by a lino of nol more than-nor loss ithaV ? '"(, iu>:>ii?<.iiniuui for ca ojoro l. !? ~?, proportion. atoH.x W "luuW tiu4xvjrtea-..r-divorlcd: and. D^so" V V;^'offending kIuii i? lorc^, *''?-?''?ftsK d sqiialillotl from hold H? Vi-ilV A U l-'-hi'M trust under Uic constitute-?V M l!,C Awmbly ?IUI by a twivthi.HU votJ reliero Ifjrn or tliom of suvb <{f^'^^< "J"'J" i"'""1'.1 into tl,e treaffi^^Av> #-'a<'*ot HlJ tHfl?tCjzlcd or diverted. It will be obintrvfed tl at the plan I havo pro posed for the cxtin >Mi*hmoiil of the public debt differ* inatorluh7 from the one proposed bv Governor Oi r. The ?chemo hero present oil la in BUCceaaful o|wral!ou in ihe best gov erned States of the Union. Experieneo lias demonstrated that a suiting fund operating at ttmpouiul interest is not only liablo to great abuse, but very seldom, if over, accomplishes the object of it* projectors. In the words of Dr. Hamilton, of Aberdeou, " tho iucreaso of revenue "r-th? diminution of expense arc tho only means by which the sinking fund can bo enlarged and 'trf opera tions rendered more ifleclual; and all the schemes for discharging the UStloua) debt by sinking funds, operating at compound intoi-uat or hi any other omuio-, uiilos? so f ir as they aie rounded upon Ibis principle, or by borr >w ing money elsewhcro at a oheaper r-te oi in terest thtiu at home, to redeem tho debt at present worth, aro onnjtUUly iButOry.'.' A forcible diustraiion of the oar rocinosa of tills argument upty bo fnind iioro it I l>o.no. The city of Charleston h is smik in lier I sluking fund th.1 sum of $891,03-1.33, which Was invested to compound i.itero-t and pay I Iho city debt. The estimated valilO of tho ^ttttsolg of this fund is act down at $246,9.?7 20, showing a loss of 73 per cent, of tho aujouuJ Invested. Thun Ii lias nutunlly u-teUyl to t!,. l debt which, it wna intended to extinguish. I TUo plau here proposed la fruo from the 1 objections urged against tlio other. On u cor- I lain date of each year, the surplus of n?venue, 1 after paying the interest due for such y?a'j?4 is applicable to tlio extinguishment, by thJ 1 purchase at its then pTOfcapt worth, of u por- 1 tiou of tho debt Itself, "which amount so pur? I chased will bo immediately cancelled, and to A that extent each year the debt will be cc'.urdly<m reduced. "^ For instance, if one year after tho jMissngu of the act beruht proponed there bo a surpiujffl of $30,000 to bo applied to the t-.d^mvithm^^k of tho debt, and tho then present worth o! fl^H debt bo titty coats on tho dollnr. the ho:ini9B couimissiouors could purchaso $100,0 JO S bonds or stock? having nlUiched thereto niur^H teen years' worth of uiunaiurod coupons or interest orders, or 3111.000. Thui S-iO.ooo iu cash would redn.ie the dobt, principal and i interest, by $214.000. A If during the teat5* >?;ir of the operation of ^1 this fund, there bo $5jO,000 applicable to the J extinguishment of t'.e debt?and wo proprio V to show that there vill bs that amount?ami M if tho tho.' n??-:.it wo;ill of t ie bonds Ik; I? ^ high as 90 cctits on tho dollar, the board of commissioners could inirohuse $555,553 of bonds or stocks, having attached ?iereto ten w;<:??-.' worth of uniuntnred coupons or in toroat order*, or *;t:t:.,333; and $500.000 , would reduce the debt by $S8S,S83. Ettn at par $."i00.000 at this time would ^ reduce tho principal and interest of the debt by $800,000. Tho uccompanyinR table will exhibit tho probable operation of this surplus .fuud in tlio extinguishment c, tho public debt. Table Showing the P.obable Operation of Hie six Mill Tax in the Paymeni of the Interest and the Extinguishment of the Principil of the Public l ebt r>:it[o!>. 8rci>uJ., Third 1'utirlh o. l.,L-i 31, ln74... \ms... " liTfii... ir?7... M 1*7?... .1 " 1?T?... f ?? la*)... 18*1... litfi ' " 18kj... 1S84... 1886... ia*ti.. ! " 1887... " ijaa... 18*'J.. " I8VM... " 1801... , " im?.* .. 189.1... M |1GO,000,(KX>| HJ.????.!??) Oil iijsra^aw mi ll.<K*7.i|io mi i 10,8117,7(1(1 mi 170,?*?,non liMiiK.4T?? <?' ? 8\7I?VMU Hi 'j.5fi-?,h.u; ??i 8,097,507 us H, lia\341 *?? lso.<?"o,uu> 7,609,78X <>?<? G.si>l.4li ?7] C,171,4li KG A.411,280 Hi 4,038,194 i? n.i.om.uuii 3,7*?. 12.'? 34 8JI 4,473 sii, 1 1,"jjx.:hi -jri I, ?W>7,141 7" 5 a $7,?l,l??.l im 7ir?,uiin i?> ?42,-Jiio it &*t,iH) ii ; 016,401 r.io.KH a?l on-i,uia an* 66?/>*i si i^l.s.u ti 4<r..".su .'hi 4"<0,.!>>u; ? 4M.'- i - ' :i7t>.-^?4 oa 3-2i>7c hi 278\29l (?s; Vi .,147 Bel 174.81.? 37 I1?;mio i" 00,418 '-< JIMO.i??' l>> 188V Ml ?<!I7.*i?i ???' &&fifH oo, t)OJS3H (*?t 3t9.s91 8oi 3>r7.i?!C? 14! .e?r..44'.i 7u 4fl,IO*i 7s 482,4111 M9.4I3 ?? t*4aM94 17 GiM'S.'. 07 674,18 i 10 721.7u8 3ft iff 4,0591 4 926.111 S3 '.?8 jBtKI 63' 1,019 II BO eg ?> 5 r. w ?.??.um oo am.ioo on itu on ?90,100 00 4 r.?. 230 On !'? 1,189 04 4?9,444 1? ttti\S05 BO 7*> rvnti. f'vms si ?v> Oaau. GUI,'.>98 31 740.136 :i7! 79I.08T. 1" H49.(?ri IV> 874.C?2 48' $1 00 926,111 173 Mijooa M l.oC.Ml 70 IUIU. 3 ?? -i P; frjii>kj 70,000 80.01.X1 li.i.mti iWi ua liana October 31. laul, t u.: u :?? Tli:h tublo, SB has been Been, lias beon based iijKm your reduction of Ilia public debt by u scaling process, to u maximum Dl et on (be largo niiuMiut of ?1 ?-'.nOO.UOd, which Ninouot I havo selected simply lor lire pur pose of illustration. taxatiok;. Taxation is defined aa tho taking of private property for public u*e. Tbe exercise of this jiotror is always rcgarde.il by tho individual with a jealous eye; and is a subject of cspociil interest. It affects in its operation every individual who forms a component |wrt of the body politic, whether fio bo the owner of property or not. The diaotissiou of the vaiious systems and tho best methods of taxation, engrosses the attention ol the stales men of tho oivilieod world. Whether iu "proud Britain, reativo France, imperial Kuasla or fevirish Italy," it is ai the presonl uiomcul a question of all absorbing interest. Taxation, tn somo form, is as ancient iu origin as society itself. Xo Civilized oom inuuitr can exist without taxation, and no high degree of civilization is allaiunblo with out comparative large t-ixotion. The principle, laid down by Adam Smith, which ' ?<?> biHin ougrnfted upon the funda mcatal 1 a of evory civih'zed country, "that tho SttbkKu of every- Slate ought to coutri buto towards the support of the government as nearly aa possible in proportion to the ruveuuo they roapectivoly enjoy under the protection of thu State" U a truism univer sally accepted. That uyiiem of taxation, thorefbre, is most just and equitable, and least oppress!vo, which is so framed aa to carry this proposition into actual operation. The constitution of this Stalo evidences tho intention of its Cramers to illustralu this prin ciple in that Bcottoa which provides for a umiform and erjuai rate of assessment and taxation, and which declares that all property, real, personal or possessory, shall be tu '.<- '.' to tax**Hub. This system of taxation succeeded tho sy.-.. tem, or rather lack of system, of tho feudal ages, when all property was hold aa Hots of tho crown. Tho crown was maintained by the crown estates. The lords, or the original Sovereigns under the crown, exacted tribute from their serfs In time of war oaoh lord was expected to furnish his quota of troops and bear his share of tho expense. Justico was administered by the lords proprietors, and the measure of justice meted out was regulated by tho ability of the person so do airing to pay for it. Among tho Mehrows, during tho time of Solomon, taxes wore levied upon houses und transit taxes and tariffs on the introduction of foreign merchandise. So oppressive was the system of taxation thon that it caused tho stoning to death of Adorum, who was "over tho tribute" and tho secession of tho ten tribes. In the Athenian republic no direct taxes wore levied upon real or personal estate, but revoimo wan derived from iho sale of public land, tines and confiscations, and a capitation tax upon frcodmen and foreigners, duties up m foreign commodities snd morchandiso. Iu Home, under the republic, tho spoil* of conquered nations aud tho annual tribute re quired of them, paid the oxpenses of tho gov ernment, but under tho empire portions of tho rovenuo were sequestrated, capitation tnxes levied, taxes on corn and heavy sums exacted for the privilege of Roman citizenship. Iu Franco, prior to the revolution of 17!?*, tho nobility and clergy were exempt from tax ation, and tho burden roatcd heavily and with crushing woight upon the poor. Resort was often hud to forced loans, Bale of monopolies, aud oven confiscations, to meet the oxtrava gaut expenses of the monarch. To return from this digression as to Iho va rious methods of taxation of force st different periods of the history of the world, the sys tem of taxation which now prevails is pre eminently superior in that the burden is equal ized, each individual contributing lib share of the expense of tho State in proportion to tho protection of life aud property he enjoys un der tho laws of the State. It will he admitted by all that taxation is a necMary ox pen so ; it is also a desirable ex pense "It can probably be demonstrated," It has been said, " that there is no one act whHi can be performed by a community, which brings in so large-a return to the credit of cmhxa?on aud general happiness, as the Ju tliciotia expenditure fur public purposes of ? fail percentage ul tlio gcticrid wealth, raised l > uti equitable system of taxation. The fruits of such cx|?c!uiituro are general educa tion, and general health, improved roads, di minished expenses of trans|Kvrtatiou, and se curity for life and properly." Taxation is not therefore an unmixed evil, which ( very one should make it Ins duty to avoid. The tux gatherer is'not, assome assert, Ihe natural enemy of the tax payer. In the eloquent language of lK-ems: i *'I do not look upon l.-txaticn as uu unmixed evil; the clouds Ui.it gather above na in the ItoaVetia, d.itk as thojf may seem, denso an ihey may Ik.-, have yet their g.ildnn edge and silver lining. These clouds uru thu laxos of tho ejith to support the grent economy of nature. They stick up the exhalations from myriad fields and hillsides: Ihey absorb the mists of rooming and tho dews of ere; but they do n<>t rob tho earth, they despoil not ihe meudovvs wrliich they assess); for through the wonderful chemistry id' thu skies they re turn in fertilizing showers, they are dispensed in rivulets uud rivers, to make thu wilderness blossom as the rose, and tho harvest fields laugh with fatness." Kreu so. under a wise economy of public administration, tho revenues of government appliud faithfully, legitimately and honestly may return seven fold, und ptodiiconew fruita of general prosperity. Hut says some tax payer. " I admit the nojossity tor taxation ; I admit that it is a de sirable form of expenditure. Hut our repre sentatives coming, as a majority of them do, from the non-property holding class of our citizens, have heeu inconsiderate and careless in the levy of an excessive and burdensome rate of taxation. Taxation has increased at an i.-i.ormotis raic since the palmy days unit Mlum, and to a far greater extent than is necessary lo meet the public requirements." I<ot us enquire libw far this lax payer's assertions are e\.rr?s ' : Under the anomalous system of taxation in vogue during tho palmy days ante hel ium," real estate borw but an inconsiderable portion of the public expense. That species of proporty which paid the largest annual premium upon tho capital invested, could best afford to bear the burden of taxation, and hence tho revenues oi the State came chiefly from the tax on slaves and an arbitrary1 tax upon free persons of color. For instance. $000 invested in a healthy male slave would realize yearly at least $170 upon ti e investment. The owner could therefore well afford lo pay the tax imposed, as in 18C0, of $1 20 upon his negro slave. In I860, according to the census of that dale, there wore tu South Carolina 402,406 slaves, yielding to the Stale a tax of $1.20 per bead, or $607,031.50, and 9,014 freo persons of color, paying n tax of $3.00 per head, or $211,742, making a total rovouuo from taxos upon slaves and free persons of color of $530.773.50 or nearly uiiio-tenths ol the entire amount necessary to carry on the gorornmeut. Tho practical workiug of this system wa9 tho fostering and building up of a largo and pow erful lauded aristocracy ; a man's tiilo to rank and social |iosiliou depended upon bis princely acres. The greatest boast of tho South Caro lina gentleman van bis inheritance of vast landed possessions, the hunting grounds of his fathers, tho pride of his children. The eompii oll-r general, in bis report to tho (lenond Assembly for 18G0, stated that " the tax cn oil Iho land of tho State, amounting to 17,658,401 acres, produced only $82,515.61, which is less than an average of tlvo cents per acre!" Valuable COttOn lauds which the owners would not have sold for hundreds of dollars an acre, were valued for the purposes of taxa tion al five cents per acre. Now, human slavery Is abolished. Killions of capital uivosted hi human chattels have been SWrpt Otll Of OXiAtCtICO With ll Single stroke of iho |ieo. Some other species of proporty moPr bear the expenses of the gov ernment in its stead. Winch is it? The ex perience of the eivi?ted world answers that the true basis of taxation is real and {mrsonal atatt, and the now regime in conformity t?? thai experience baa adoplod that ay stem for the now order of things. Tho practical operation of this now and equitable system in South Carolina is the samo ago. The laxes fall chiefly where they be long?upon real estate. The. owner of real estate cannot afl?: d f-o keep thousands of acres Idle and unproductive merely to gratify Ins personal vanity, and because he inherited theui freu his falhors and pay the tax upon them. Stern necessity, therefore, will compel him to cut up his ur.cestral possessions into small . farms, and sell to those who can and teilt make them productive; and thus the masses of the people will income property Judders; wealth will bo more widely diffused : the peo ple will become mote prosperous; immigrants will come and settle amongst us and develop the vatt resources of the State. Thus on ward the march of civilization makes its ray, and no cry by the large real estato Owner of excessive texation can stay its progress. Rut aside from this view of the question there is another which I will now present. That the aggregate amount received from taxa tion since 18GU has greatly increased, is a fact which uone will deny ; but this is also true of the rational government, and .of every .State ol the Union. The question is not whether taxation has or has not increased, but whether tho comparative tute, of increase is ttreator in this than other States of the Union. The following table will show the increase of taxation betweeu the years 1SG0 und 1370, iu live Duroocrdiic States, as shown by tho ninth census : Slate*. Aggregate, Taxation, Jncrvaar In Av ISSn. IsTO. 10 vows. ?n. i.:?.,**. Go-irg!*, $ ;07,S&3 $2.?27P? $4*7 ?3 7 10 TVnaceaee, 1. 8,SSl,M? *.0? WfiM i Marv'u.a.1, ?.lS?,sa5 O.^eoo S80 W Kentucky, X I4S.?41 S.7Su,IIS 144 16 C-J-> Mnuwmrt, 00*.*? lS.?oa,4!?S 8.14 81410 U*ueral avvrasi- annual lucre***, SeS-10. i8?o. mo. 8. Carolina, |1.?90,**0 |2.7?7,875 $1.16 11 6-10 Thus it is seen that while, the grdysf^ an nual increa.ee of taxation In those five Plates has been 20 6-10 per cent, iu South Carolina it has been only 11 8-10 per cent. Tho aggregato taxation of the nstional gov ernment has increased from $94,180.740, in 1860 to $280,391,621 in 1870, or an average annual incroaso of 19 4-6 per cent The following table wilt exhibit the per capita taxation in several cf the States, (as shown by the ninth census.) and by tin-; table, also, South Carolina gains by the com parison. States. Popu lation. Mia.vtchitaotta, 1.457.AM Now York, 4v?S-2.T.'9 Ohio, S,tW.\.?.i Mart-land, Tsn.xji Kentucky, i.a; ??? South Carolina, cC.c- <; Agnv-jate Per taxation. capita. ?24.9-JiJJOO S1C84 4K..\M.S08 11.08 SS,CSs.a4S ?.75 ?,ta?,S43 649 5,700,118 4JS s,to7,e/r? S.S? The per capita taxation of the United States, according to tho ninth census, is $7.27. The State of Nevada with a per capita taxa tion of $19.40. ami tho State of Florida with a per capita taxation of $2.64, probably re present tho extreme and moan of tho per capita taxation of tho different States. Tho average per capita taxation of tho thirty-seven States comprising tho American Union is $7.27, or $:i.3? moro than that of South famine ? Tho foregoing illustrations provo conclu sively that tho rate of taxation in this Scale is not excessive, r.nd that the increase ainco 1800 has not been greater than that of tho United States or tho several States. It will be noticed from tho foregoing tables that the Stale of Massachusetts, unquestion ably the best goeerved State of the Union, is, with one exception, the highest taxed of any State of the Union ; and. notwithstanding tho magnitude of taxation, fte aggregate receipts have not been sufficient to prevent an aunual incroaso of the public debt. COKCI.lsHiON. Senators and Representatives, permit meto express the hope that, while differences of opinion, incident to the rigid of free discus sion among independent and nntramm. ?i d Legislators, will lie asserted In your respec tive Houses ns to tho grave qm ml tons pre sented for your considerdion, your delibera tions may be marked by an earnest and undi vided purpose to advance tho common inter est of tho people aad the true welfare el the State. And to these ends X sincerely invoke upor. alt your counsels the benign guidance of an Omniscient Providence. tjqgarm