The Orangeburg news. (Orangeburg, S.C.) 1867-1875, October 21, 1873, Supplement to the Orangeburg News, Image 4
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