University of South Carolina Libraries
topu?ltttl?s :'.?) norno, that irtioh delay win bo. inourrcu as will mako tho nocumulaicd debt so lu.'go that thor ? will bu au indisposition tu touch It, that mm action will loa., lo liua't refttsal to pay. 1 euriiostly ho|K) that this wilt not bo tho caflo, but I feel it my duly to sug> goat tho danger. It would ho best for ?11 par tics lo look tho difficulties squarely in the face, aud mako a full und tlual settlement, by con verting ull tho outstanding issues into a cou aolidated debt, t pou which tho interest would be paid without failure. In my opinion tho creditors would bo willing to accept such an issue in satisfaction of their claims, provided too great a loss should not bo inflicted upon thorn; and certainly, in view of the constitu tional obligations, us well as regards the honor nnd good name and tho material interests of tlio .State, tho Honend Assembly should moot them half way. ***** When such final adjustment shall bo made, it will no doubt be supported by the good men of all parties, and will bo acquiesced in by tho poople." fl.AN OK AIUrsTMKNT. It is a well established principle of political economy that an individual having money to invest will make an investment in that clnss of "securities" which offers the best guarantee of safety?securities which will not only pay n premium u|K>n tho money invested, but which may bo disposed of, without loss, whenever a change of investment is desired?in other words a marketable security. Tho valuo of a State security depends largely upjn the confidence of iho purchaser in tho good faith of Iho Stute, but more especially upon tho means which tho State places tu tho bunds of ovory holder o( her bondd, to compel iho punctual payment of the interest as it accrues, and the principal at maturity. The State is sovoroign and cannot be sued; but when she enters into a contract with All individual, through her agents, nnd directs said agents to iHjrforni certain duties in fulfillment of that contract, such individual can compel the ugents of tho Stuto to execute tho will of the State as expressed in such eontruct. Thus, in three-fourths of ihe Slates, when ever tho financial officers* aro authorized to create debts by tho issue of State obligations, tho machinery for the punctual payment of tho interest and principal is provided us a part of tho contract; nnd ovory individual who actrepts such obligations in exchange for tbo moneys ho ndvaucos, receives a remedy? of which the obligations themselves are the evidonco?for every neglect of duty in tho premises on the purl of the ngeitts of the State. Such an obligation oilers the best investment that could possibly be made, inas much as Iho holder thereof has n Ht*n upon tho entire proporty of the citizens ol the Stale. How is it with the U>ndod debt of this State ? Our dobt may bo divided int.? three classes. The first class includes all those bonds, (ori ginally Issued,) of the five c lasses enumerat ed in tho decision of the Supreme Court upon the Morton, bliss nnd Company mandamus case, amouutiug lo $3,649,000. Tho so'-Mud class Includes nil those bonds und stocks whoso only guarantee for tho pay ment of principal and interest is the good faith of the Stale. This class comprises thu old bonds and stocks, (except lilno Itidge bonds.) the bonds for funding past due interest and principal, and funding hills Haul, of the State, und amounts to $4,513.503.35. The third class aro those for which ?/? i?<> vision has been made for the payment of t_i - , ? -, ' ?? ,-.mw"i?j and include." tho lilue ltldgo bonds, (dm ab sence of the guarantee in this instance being probably nu oversight,) und tbo conversion bonds issued directly by sale or hypothecation. This class aggregates $0.905,000. This concludes the his ory of the character of our bonds. I<et us now enquire their pres ent market value. Our " Janu.iry and July bonds," old and now, which comprise the entire amount, ex cept $2,189,000 of '? Aprils and Octobers," are quoted at fifteen cents. The latter, being a portion of those recently before the courts, are quoted at twenty-three cents. Now it is evident, from the arguments pre viously advuueed. that the Slate is nnsble to pay the inten .: upon tho debt as it stands, und that it is to the interest of every Ik .1 holder that the debt be reduced in volume lo u reasonable limit, so that tbo payment of interest may be resumed. If, when tho hold ers of our bonds und slocks agreo to surrender them for a now uud consolidated bond or utock, the Stato agrees us a part of the contract (of which such bond or stuck itself would bo the evidence) to provide for tbo payment of the uninudly noortliug interest and for the extinguishment annually of u |?or lion of the principal until tho whole shall be thus rudeemud; if, in pursuance of such ueree ineut, she in .tnn-ts her agents (whoever may represent her fiom the date of the contract until the debt is entirely extinguished) to levy and collect annually taxes sufficient to pay said interest and retire a portion of the said principal?if she instructs hor agents ns aforesaid to disburse the funds so collected to the purposes aforesaid, and if embezzlement or diversion ot said funds be made a felony, pun ishable us tho constitution directs, it is evident that it would be to the best iuteresl of the bondholder to accept willingly such a compro mise. For if these remedies be placed in the hands of every bondholder it is evident that while bis new boud would represent upon its face a sum equal only to two-thirds or one-halt the fneo valuo of. his old bond, the market value of the new bond would undoubtedly bo from one-third to onc-hulf greitter thuit' the present value of tho old. For instance, if- $3,000 of old bonds worth 15 cents on the dollur, or $450, be exchnngod for $'.',000 iu now bonds worth at least 40 cents on tho dollar, or $80o, the holder will have made a clear gain upon the actual value of bis bond of $350; and again, if $3,000 in old bonds worth 23 cents on tbo dollar, or $690, be exchanged for $2,000 iu new bonds wortb at leaat 40 cents on the dollur, or $800, the boldor will havo mads a clear gnu: upon the actual value of his bond of ?110; aud iu addition thereto, tho payment of the tntorest and redumption of the principal of bis new bond will be amply secured by remedies iu bis immediate possession. Before' proceeding to discuss the details of this plan of adjustment, it may be useful to examine the history of tho different States, and enquire whether they or any of them wore not at somo period, burdened with dobt evon as South Carolina is to-day . the method adopted to relievo themselves of that in dobtednosp, end tho practical operation of such method. The State of Indiana failed to pay tho in terest upon bor public debt from 1841 to 1841, during which time she acquired H re putaliou (or bankruptcy and repudiation, from which she only recovered after years of deter mined effort and tho faithful discharge of her obligations. Liko most of tho Western States st that time gigantic schemes of internal im provement, schemes for subscribing millions ' of State bonds to build canals aud railroads for the development of the great West, were rushed through tho Legislature without tho slightest consideration of their feasibility. And in Indiana, aa in most of hor sister States, these bonds wore hypothecated and sold for n mere song. The Utopian acbomos of developing the resources of the State vanished inio thin air, and the railroads aud cauala could bo found onfy in the buncombe speeches of their -' advocates Id 1840 tho nooojo realised their- true coy*; diliou, bttt ii?.t before thov liudbi-Ml bunion ?Ol Willi.? debt iiT SI ?,000,00(1, bcsales ilf: in- i Ici vsy which had lioeti uccnmnl ? titi^r I 'm .d \ ! years'. The Slute then made a compromise ! willi lu-i bondiiiildeii', in which she ogicvd to transfer her tillo *xo tho Wtlbasll and Kilo Canal in liquidation of one-hall of hor debt und to issue cortitieatos of slock, bearing live per cent, iutoresl ufler 1831, for the oilier Stall. The LegiBluturo solemnly pledged the lnith^ and fuuds of tho State for tho punctual pay ment of the interest aud principal; and afterwards solemnly set apart all tho revenues of tho Slato derived Iron) taxation for general Stato pprpOSOB, after the defraying of tho ordinary expenses of the government, to the payment of the interest and liquidation of the principal of the debt. This compromise und contract was afterwards confirmed by tho people ut tiie ratitication of the ''New Con stitution of 1850." Even the old creditors of the Stato who wore not directly Interested in those schemes and held uoiio of these questionable Ixauls came forward vvliivjlij to relieve the Stato of the foul stain of repudiation, and made sacritlces of their pecuniary in tor eats which made the compromise possible. And now, by tho faithllll performance ot the terms of this compromise, her credit has been completely restored, and Stands upon a perfectly secure basis ; and without oppres sive taxation her debt is being very rapidly extinguished. Tho history of tho finances of the State of Michigan furnished another illustration of a compromise effected between u Stole and her creditors. Tho compromise nuido by the Stale of Indiuna wns made at the suggestion of the bondholders and with their hearty assent and cooperation; thai of tho State of Michigan was made without agreement, which the bondholder was obliged to neeopt or get nothing. Her financial troubles begau in 18-10. The fever for issuing bonds to build railroads and canals raged at that time as t.n epidemic throughout the entire West. Like a prairie lire or n swarm of the dreaded caterpillar passing over a cotton plantation iu the South, its appearance was us sudden, us march as rapid, its dosolatioti as complete. In 1^:17 and ls:ts Michigan issued $6,200, 0(?o to build canals at id railroads. The Gov ernor made nrrangtttuenia with ??: banking company to net as the agents of the State in the negotiation of the bonds. The COm|*any negotiated a portion of them and made the proper returns to the Suite ; the moneys were payable iu installments, 't he Mate was enli lied to receive about ?2,857,039.70 on tho remainder of bonds in hands of the company, when suddenly it collapsed, and it was dis covered Hint the whole amount of bonds had beta, hypothecated or >sold. had passed into the hands of innocent , artus. ami were out standing as n charge against I he State. The Governor publicly called upon tho holders of the bonds either to pay the balance tine upon them by the company or surrender them und have the amount they p'-id for them refunded. The Legislature of IS41 confirmed the action of the i lover.mr and again demanded the sur render of tho bonds upon iho terms before mentioned. A portion of the entire Slim of $5,200,000, amounting to $1,387^000, were not included in the demand lor the reuson previously given. The bondholders refused to accept the com promise and no further action was taken mud 1S40. At thai time (Marco, 1810.) the State sold her railroads and received as part pay soino of these nart |i;iid bonds, scahnu ih? in uicipai ax tno rate ol ?403.88 por $1,000 in bonds, at ? the interest at the rate of six |>cr cent on $302.73 for.ach $1,000 of said bonds. In le.'i?, the legislature directed the trea surer lo notify tho holders of said bunds, by public advertisement, to surrender their bonds Within six mouths, as after that time no ni ter si would be paid, The six months expired August, 1855, and from that lime the ImmuIs have been adjusted at the rate of $.r?78.67 for ooeh $1,000. Thero are still outstanding $54,000, udjiislnblo at $31*242.18. Under the operation of wise legislation, ample provision having been made for the payment or tjie interest and extinguishment of the principal, by solemnly setting apart a portion of the annual revenue and the levying of a spocilie annual tax for that purpose.?tho credit of the Suite has beeu completely re stored ; tho resources of the Slate nre largo nnd annually increasing, while tho debt is smtill, taxation light, und no occasion lo make it oppressive. Tho auditor-gonoral in his re port of September, 1871, Mates lliot the sink ing fund was largo enough to furnish the means of redeeming all the bonds outstanding before their muturity, if the holders could bo induced to .surrender them, aud the Governor, therefore, recommends il o re|>eul of tho act levying u specific tux for lunt purpose. The history of the finances of the Statt ot Illinois is worthy of especial notice in this connection us in several respects she passed through a similar experience lo our own. The success which rewarded that baud of patriots who combined to restore the credit of the Stale, and to lilt the cloud of suspicion of re pudiation which rested heavily U|ion her, might well furnish a lesson to the citi/eus of this Stale who have her best interest at heart The financial trouble* of Illinois occurred prior to the adopliou of tho constitution of LS48. Sho hud neglected for n long lime to pay the Interest upon her debl until the prin cipal nnd il- interest accumulations amounted to Ihu enormous sum (so considered ul that tune,) of $18,000,000. Purly leadors im peached the validity of the debt, and recom mended that the jtsoplo refuse lo provide for its payment, while tho tax payers relieved from taxation for one purpose, vigorously Op posed paying any taxes at all. The distress ing condition of the UuaUOCS >s lltly portrayed in the report of the auditor of the Slate of Dcoeiobcr, 1870. Said he : " To those who can remember the condition of the State of Minos in 1847, Iho treasury empty, ihe Gov ernor borrowing money lipon his own credit lo pny iho postage on the loiters written on tho business of the StnU?, her bankruptcy known and sneered ut all over tho world, even her honesty of purpose doubted, ami some ol her own sons trying to bring her to tho infamy of repudiation; the simple slute nient of these facts requires no comment lo make them Impressive. Who can not see that ut least in tho case of Stales mid nations honesty is the best policy." The legislature by act of February, 1817, authorized i)ie rcfuudiug of the Stale debts tho preamble of said acl is quoted here, as it shows iu a nut-shell l|ic exact condition of the dobt. i " Whereas tho Stale of Illinois has nt vari ous times issued a huge amount of internal improvement bonds of various classes, yet beaiing the same numbers, nud having inlor es? coupons thereto nttm-hed similar in unm oor and description, thereby causing great confusion and opening n wido door for fraud, and rendering it oxtmncly difficult to pay tho interest u> those justly unlillcd thereto; nud w hereas, also, from a want of a full and per fect ncird of the classes, numbers, und de scription of Iho bonds so issued, il is impossi ble at iho present limo to determine I he pre cise amount of I he indebtedness of tho State, its cburnetor, and when pnyublo; nnd whereas, it is of the highest importance thai the actual amount and elcMacler of tho present Stale dobt should lie nccurnUily uscci tained irt the I earliest possible poiiod, preparatory to a moro united and vigorous exertion for its payment, and to onablo the Convoqt-ion for altering tho constitution (about to assemble) to make some .ill' ipiato^syjStlyiitlMinl provision iur tha?pay-j irteiit ??! tho pi it.< "u?! when duo, tjn> ncer'.iing iulei.V?l aud l|?o iwt,e^st hi iiWcftrj- Ihorofaiv," 1 IMlor ".Iii* ii'-t t'to i-n?ro'-debt was fjini{ t-ii, i-v?cpt c.rUiiu bonds und Hprin kugvvu, h tho Muailistor mid tUeboins bonds and scrip, Canal bonds, utld oilier evidences of indebtedness of tbo Illinois and Michigan oaunl. New internal iinprovemeut scrip \vns issued for tho old dobt, equal in amount and bearing like interest and payable at tho same time as the bond or crip sun endured. The ''Mnealister and Stebbins br-uds nnd scrip"' amounted to* $91.t,216.44. They cntao into the possession of said linn as the Bgentfl of the State. Tho State received for said amount $261,600.83,or about 28 04*100 cents, whereas they were entitled to receive accord ing to agreement snout 40 c uts on the dollar. Til* Brill refused to pay the balance, nnd the legislature iu February, 1X49, in structed the Governor to couiproiniso the mutter by offering to fund tho amount actually advanced upon tbo bonds with 7 per cent, interest, from tlio dale of Iho udvsiICO to the time of funding; und notwithstanding these bonds had passed Into the handn of innocent holders, thu State refused to recog nize any furl her liability Upon them, except to tin- amount of 2i> cents on (ho dollar with 7 per cent, interest, This arrangement was ucqiiiescctl in by many of the holders ami most of tho bonds have been funded at said rate. Tho constitutional convention of 184s submitted to the people tho billowing amend ment, which was ratified by a largo majority of voles: "There shall be uimnnllv assessed and col lected, in the same manner as other Stale revenue miry bo assessed and collected, a tax Of IWO mills upon each dollar's worth of taxable property, in addition to all other taxes, to be applied as follows, lo wit: The fund so orouted shall lie kept separnle, and annually <>n the lirsi of January, be appor tioned nnd paid over pro tnta, upon all such State indebtedness other than tho canal and s.lu-ol indebtedness, as may for that purpose be presented by ihe holders of the same, t<? be entered as credits ti|>oii and to that extent in extinguishment Of said indebtedness." The lirst tax under this provision was col lis ted in 1840-60; the credit of the State immediately revived, nnd in 1863 Ihe State entered upon an ers "I prosperity unprece dented iu iho history of any oilier Stale of the Union. This feature of the constitution o-ierated beiielicially to the tax payers in a manner entirely unforeseen. As the State grow iu wealth the two mills tax, the collection of which was imperative, began to realixe n I larger sum than the State could annually apply to the extinguishment of the debt, as the holders refused to surrender ko valuable a security until compelled to do so by its ma turity. It became necessary, therefore, iu order to avoid iho collection of nn umnttut of 'money under ibis tax in excess of wbnt could be actually applied yearly to the extinguish ment of the debt, lo reduce the valuation of properly us low as possible. The State audi tor, iu his report tor 1809, estimated the taxa ble property of the Stale t.< be assessed at twenty-live per cent, or one-fourth ol its actual value. The last levy under this provision of iho constitution of 1848 whs made in 1810. The moneys now on band, together with the r. v ? . enue from the Illinois Central Railroad, will bo ninn. Iha.kl..:...? u ......... I ,1... riitlio I indebtedness at maturity, which amounted ou UieSlet day of I)ecomber, is~2, i?> $2,060, 160.08. The foregoing illustrations tire Biifnoioul to show tho manlier iu winch several of the. States got into debt, the means they used to I extricate Iheinsolves, stal with what sueeoss. I The lesson I hey teach is loo plain to require i comment. Having looked ut thai picture, let us ox I amiiie tins : The State of Miunosots, in I860, autfiorixed j the issue of $5,000,000 of bonds in aid of cor : tain railroad enterprises. The roads wore not I built, but the bonds were disposed of. The State rqfusod to recognize the validity of iho debt or provide lor ihe payment of interest or principal. They buve beau practically re pudiated for fourteen years. The bondholders have undo repealed efforts lo elect a compromise, lall euch and ovory vllbll has been unsuccessful. The present treasurer, however, states that he desires tlio matter to ho settled and is en quiring us t<> the best method of adjustment From tho report of tin- committee oil fin ance of the constitutional cmvculiou of 1868, of the Stute of Arkansas, it nppenra thai said i Siato had virtually repudiated her debt lor i thirty years. In reply to the question I " What is the present value of our Stuie I bonds," the committee reported "Thai tho j bonds of tho Slate of Arknusua sre not I quoted iu the market ot any city of the ritt ttseil ioorhl. This is attributable to the lad j that iu a |>crind of neur/y Unity years, the I State authorities have not provided for the I payment of interest OU her bond*. A system of i ilnaiiciering know n only u> thieves und robbers I without conscience prevailed to such an extent j that their operations now cost the Statu the j neat little sum of $6,104*601.16. Not content I with impoverishing the Stale, iUksol.iling the j country,and causing mourning at every hearth j stone, we Hud these self-same men arrayed iu hostility to the present reconstruction measures, hoping thereby lo hide from tho public gate and investigation, tho plunder aud thefts of thirty years I * * * * For years the levy of iho State lux was light, the people tlumg/it the government wus well und economically inanage.l, by lolling the bonds run for years without paying any in terest, und not seeing any appropriations for the puyuiuut of iuieroit on those bonds in the disbursement of tho public funds, it is in t strange that they forgot the indebt edness of a prior general ion." It is pioper to add that the State authorities referred to, who were responsible for that dobt, belonged lo the Pemocratlo party. The reconstructed government has recently made provision for thu funding of tho debt, hoping thereby to it-store iho credit of tbo I Stute. The Slate of Virginia bus not pnid all the annually accruing inteiesl of her debt lor years, and it is only recently that ihe public have been made aware that the vein mo of debt bus been largely nOgDWtiUHl by thu ac crued intoicst. Virginia I.as boon under a liemocrulic administration Iur years, and, like tbo laws which control I he am mal and vege table kingdom, the nearer the debt approaches maturity the larger it grows. It is stran.-- Indeed thai Umso who created and controlled the debt, and who still hold iho reins of govoruinont, bavo made such in adequate provision for the ptymsut, both ol interest and priucipnl. The debt of Virginia is roportod to l>e, in round numbers, $47,000,000. The Legislature, session 1871-72, provided for the payment of 2 per centum of iuleiost up .ii bonds entitled to ?> per centum of in terest, nnd 1} per centum of interest ii|sm bonds entitled to 5 per centum. I hi- is tho best they have done in dcfvUM of the Domi cilii honor of the Slate. Sitlliciont bus boon written ''lo point n moral." J.ol us now return from tlio study of tho conduct and management of tho debts of other States to the point whence wo started, vir.: the adjustment of our own dobt. Governor Orr, iu his annual message to the Jgjaislatitip (tiCSSlullfef ttt?h%iii?)TT!^fli)low. j|MrAt?ondutioii? Iii i. ;nii'l lo {'('i pu'dic "It Is, however, oiupn nlK proper that some Iii ??unfal sohomo should be now adopted to proputu tho Hinte t? moot tho priuuipal ot' the debt as il falls due. If Iho interest is regularly paid ou tho debt, $100,000 nuuually set apart as a sinking fund for twenty years, Invested hi salb securities yielding six per cent, per annum, tho principal being further iucreused by the investment of tho interest annually accruing, will accumulate tho sum of $3,809,312, which will bo ueurly adequate to the payment of the entire debt then due; and 1 recommend that proper legislation be adopted ut tho present session to inaugurate litis scheme. "Under tho act of September, 180C. provi sion was made to fund the interest on stock issued under tho authority of tho net of 180:1. to continue the construction of Iho new Stato House ; the whole amount issued was $2-1,820. Tho issue was not made until somo lime during tho year 1S04, when there was a heavy depreciation of tho currency nnd when labor ami material wore in a cor responding degree -appreciated; $100,000 were issued in 1802 under authority of iho act of 1801, when lnlmr nud material hud appreciated very liltle. In my proclamation I excepted theso two issues from Immediate funding until the (ieneral Assembly met aud determined whether theso stocks should Ijo scabs! to the real e<i!w received by the .Slate for them when issued. The convention adopted a rule for the government of truus nclions between individuals during this time, which wns just and honest, nud no reason is perceivcVi why tho satuo rule should not be applied in transactions between tho Slalo and its creditors." Krora tho above, it appears that Governor Orr acknowledged thai no provisions had been made for the payment of the principal of tho public debt, and realized tho necessity for, :md wisdom or. tnakiug immediate pro visions therefor, lie also coucoived it to bo j just sod proper to scale a poitioti of the I public debt, and took tho responsibility upon I himself to exclude them from tin bonolits of ! tho funding acts, until the Legislature might meet nud take nction llicreon. While it is Iruo that the Legislature dis regarded his recommendations, every one will admit their soundness. They are quoted hero for the purpose of showing thai a precedent has been established for the reeommoudaliuns which follow. 1 recommend; Fust That all the bonds of the .Stato for which the Stute is actually liable, Ichs $38,000 Stato capital bonds of 1 son past due, to bo otherwise provided fer, bo scaled ill the fol lowing manner, lo wit: Thai the State treasurer be authorized, and instructed to receive from the holders willing to surrender Iho same all the bonds nn.i stocks of tho Stale previously issued und now outstanding ngninat tho Stale, (not including the State c.ipitul bonds before referred to, and bonds known as "Conversion bonds " issued directly by stile or hypothecation, the numbers nnd denomination of w hich will more fully uppear by reference to tho treasurer's registry of bonds nnd Mocks converted, or issued directly, amounting to $6.908,000,) and shall thereupon in exchaugu for and in lion ot said bonds or stocks so surrendered, issue to said holders other bonds or certifiestos of Bt?>ek, as they mav desire, equal ill amount to of the faro value of tho bonds or stocks so murvuUcied. That the State treasmer Is- authorized and instructed to receive from the holders willing to surrender the same, all tho bonds of tho [ State, known as * f'diversion bonds," issued directly by sale or hypothecation, the numl-er I ami denomination of which will fully appear ! by reference to ihe treasurer's registry of I bonds and stock converted, and issued diti-ct ] ly, and shall thereupon in exchange for and j in lieu of such bonds so surrendered, issue to said holdois bouds or certificates of stock equal in ShtOtlUt to - of the faco value of tho bonds so surrendered, and no liability ou the part of tho Stato is recognized further than is herein limited and expressed. Thai the Stato treasurer tie authorised and instructed to receive from the holders willing to surrouder tho same, all lite coupons upon the bonds before mentiono I, which have ac crued or will accito oil tho 31st ol October, 1S7 3, and tho interest orders upon interest duo upon certitfoatOS of stock as aforesaid lo , the date aforesaid, and shall, thereupon, in exchange for and iu lieu of such coupons or interest orders so surrendered, Issue to said holders bonds or certificates of stock equal iu amount to-of tho face value of the coupons or interest orders so sur ieiidere.1 im follows: Coupons and interest eiders of the principal of bond* aud stocks scaled at - to bo scaled in the sauie proportion, and coupons and interest orders of I tho principal of bonds scaled at-lo i be scaled in tho same proportion, i Thut the Stato treasurer bo instructed to receive from tho holders -willing to surrondor tho s ium all tho pay certificate*, bills payable, scrip, or other evidence of State indebtedness outstanding against tho State mi the 31st of i October, 1873?except appropriations payable us deficiencies?and shall ihoroiipon, in ex change for and in lieu thereof, issue to said holders bonds or ccrtittcatea of slock equal in amount to-of tho face value of tho pay certificates,'bills payablo, scrip, or other evi dence of State indebtedness so surrendered : Provided that no liability lo pay tho aforesaid pay certitlcutes, bills payable, und scrip or oilier evidence of Stato indebtedness is recog nized other than is herein limited und ex pressed Second. The bonds and certificates of stock herein authorised to bo issued shall bear iijkiu their face tho words "bonds aud certificates of stock," ami shall also bear upon their face a declaration to the effect that tho payment of tho interest is secured by tho lovy of an annual tax, and the redemption of tho princi pal is likewise secured by n sinking fund pro vided for iho purpose, Which declaration shall be considered a contract entered into between the State and ovory holder of such bond or stock. Said bouds nnd stocks shall be signed by tho-. countersigned by tho nud have the great seal of tho Sluto ailived thereto, nud there shall lie preserved in the offices of the secretary ol Stato ami Stalo treasurer, a description of tho amounts, datos, and lime of issuing said bonds, and tho bonds and scrip so taken up shall be cancelled by tho treasurer, and a list of their dutos, numbers and amounts, and by whom signed recorded ia the oftlces of tho Stato trea surer and secrotnrj' of State. Third. That the faith, credit and funds of the Stalo la? solemnly pledged for tho punc tual payment of tho interest, and final re demption of the principal of said bonds and stocke, and for providing n sinking fund for that purpose Fourth. That tl.oro shall bo annually levied and collected, from until the bonds and stocks herein authorized ar<9 extinguished, principal and interest, in tho same manner and ut tho same time the gene ral Slate taxes nro lovied and collected, a tux of-mills npon tho dollar of each hun dred dollar's worth of taxable property in the State, iu addition to nil other taxes. That the fund so created shall be kept Separate from all oilier funds and oh .ill bo applied : First, to tho pnymeut of tho annually accruing interest upon the bonds and slocks herein authorized. (jvOO'i?, 'tho hui |.Of Said ftllj.l* remain iuy in Hiv ?Vi ' f*y. after Um payment ul Uo said} interest ah?'.''h? -AppSjed on or Ichiro incut of tliO principal of 11/(1 l'TM>Ti> !, 118 follow, i -?,,R-- ?'? The -,-, -,-.-Mid ? ? ??, >h dl constitute a board of comnuV sinners lor the management ami control of the mid surplus fund for the extinguishment of tlio public debt. The said board shall give notice by public advertisement for thirty days prior to the of - of each year, that they huvo under their control tho sum of-dollars to be Applied to tho purchase of such bonds or stocks as may Im? presumed lor payment by the holders thereof, on tho-of-, ns aforesaid; provided, that said bonds l> ? pur? chased at a prico not above their market value at tho time of purchasu, said value to be ascer tained from the principal stock markets of the United States. Third, that tho bonds and stocks so re deemed shall In; immediately cancelled by tho treasurer in the presence of the board, and tie entered as credits upon and to that client in extinguishment of the public debt. That a detailed stutvincut of the number, denomi nation and series of the bond- and stock? SO redeemed and cancelled, together with the prico paid for each bond and stwk. as aft.re said, shall l?o piepared by the treasurer, signed by tne Isiard and furnished to the Qsueral Assombly at the oomiucucotncut of each annual session thoreof. That embe/./.leinent or diversion of said lentis, whether directly or indirectly by speculating in said bonds, or purchasing them at fictitious prices, bo made a felony punish able by a line of not more than-nor loss ?? -- " Hi ' ?'1 l*^"*"*< frf r*,t ,.v,ro >t.? !!?# num^, *?4te./aWl o, ,|,^r,^. and, ? . rT, ":' V" f' ' "*< *" **"?dm?j shwti ing si-.V f,t> , " V'f1'*' ??.?Sr r|,o Cou.stitirtiCU.ytV ICM*U?U?IW*j .'.'?mM/ shsM by a t.wi>th?-4% vot' WM ? o Ifl? SV Ihern of such '?^''^'?V? "**'"' i'-i-?!*! b.U? IU diverteu. It will bfl oba?>ri-?d thnl thr? plan I hat? pro posud for (.be cxtii, ?stislimeiit of the pubjio debt differs inateria>U7 ^rom M'e *"?" proposed by Qovornor Oi r. Tho scheme here present* ed le In successful operation in the l/ost gov erncd States of the Union. Kxperienca ha* demons;-atod that n sinking fund operating m cotnpoutul interest is not only liablo to g'cnt ubiuM*, bot vitv aeldohi) if over, Hccoinpushe* the object of it*< projectors. In the words of Dr.Hamilton, of Aberdeen, " tlio increase of revenue or th? diminution of expense arc tbo only moans by which the sinking fund can be enlarged and it.4 oiiorn lions ronderod more iflVctual; and nil the Hcbemos for discharging tbo nation.d debt by sinking fund*, operating at compound ijituioat or i:i auy other manner, utiV-* so far as they uro founded itpou this principle, or by l>orr iW? ing money elsew here at a chcapoi* r-te ol in terest than at home, to redeem the debt at present worth, are e>nrt)>leUlij itlutory'* A forcible illustration of the cotrcetucss of i'iIn argument irpiy b<j (Vu|i d here r.t I homo. The city of Charleston h is sunk in liar j sinking fund tho sum of $891,034*33, which i w.i* in vest IM I to compound i.itero-t mid p?y j tho city debt. The estimated valtIO of tho QSsets of this fund is sot down at $246,991 20. I ?U't/rlu'4 a lOSS of 73 per cent, of tue :u:iouu3 j (orealed. Thu* it hao neluaily a'/do-i to thel dVht wlii'-r? U v/aa intended to extinguish. I Tlie plan here proposed is iV. j from tho I MriSOtfofM nrjc'd against the other. On a cor- I ?am dauiof each year, Die surplus of r. vctiuo, J aftr p*yb?tf tho interest duo for such yuu-^tm is sppfcsbie i/* tho OXtoOffUlshtncnt, by tho | porch*** at if* llit? pWsnt worth, of u por- I tion Of Ul? 'lobt fuHf. *wh!cii amount so pur chased will I? Immediately '?ancotlod. und to^ that extent oacti year the debt will beactuai'sj j reduevd. For instance, if OHO yenr nftcr tlio pasgugo^ of tho net heroin proponed liiere be u siirplujs? of $50,000 to bo api lied to the < </.?y/,vi,,^B of tho debt, and tho then present won debt be flfty ci nU on ihn dollar, tnc l>:,u<.TfiS Commissioner-: could purchas.; ?100.0 j(l bonds or sbx-Us bavin,' attached th.-r.-io :,i:.^H teen years' worth of untnaiurcd ooui>onu or*"" interest orders, or $114.000. TIiut $50,000 iu cash would reduce the dobt, nrincipnl and interest, by ?214.000. A If during the tent''* year at the Obe ration of^ this filtid, thoro bo $500.000 applicable to tho gt nxtinguiahnetit of the d>.-bt?and we propose J to show that there will bo that amount?and m if tho then proscnt worth of tho bc/iids be ai \ high as 90 cents on tho dollnr, tho board of commissioners eoull purchase $555,553 of bonds or slooka, having attached thereto ten years' worth of unmatnred coupons or iu toro?t orders, or $333,333; and $500,000 would reduce tl o debt by $.88S,s8:i. Seen ai jmr $.')00,000 at this time wnnid ^ reduce tho principal and interest of the debt by $800,000. Tho accompanying table will exhibit tho probable operation of this surplus fund in tho extingiiiiliment of the public debt. Table Showing (he P.obable Operation of (he six Mill Tax in the Payment of the InferejBt and the Extinguishment of the Principal of the Public liebt I'Klttuli XinU.,lf!..brr 31, 1*74 BVrooJ. Fourth IH7Y. lK7(i.. IS77.. 1*7'.. IHM. lHxl.. Ittj Hh.i.. I Ml.. 18*5.. 18*. 1SK7.. V** im??.. ic' I ih'ji imrj . If.U.. JIGO.OUOOilfl $12,1*111,1X111 i"' 170,000,000 Jup tan <Hjti nun ,11ml fpM 7i?i I7<i .IvHi ,237 JM1 7*2 ,414 ,416 5? ,1x0 ,47* Ml .HI STJ.'.i??' iui 7U2,0UM !?? i4vi 4. 0 91,40* ?><? ?tO.tlM -.11 692,910 wj .V? l/>vi 71 S:M.S.M 2* 4s7..r.so .'hi I'-',;?m; w 411,804 tOi ::7?>.l.?I 9.1 >i ..s7i; si 27H.20I lift 2*5,347 .'>2 17i.Hi.it 117 1 l i. Wio 17 rail's .'<? ?!>. 1,. iih.i?! i" ?.'17.huh m| 2W.?MI 1??, 203,5u <?' XHMWI 9U .W.?"? 14 .i ?..l4'.l TJ 429,10.1 7> 402.4111 -.1 649,413 ?* 689,196 I, 629,716 1 *7 074,1x1 Ii 721,71? aft STI.ivv? 4 9*5,uti at '.is ,099 ..:i 1 939 -II Mi * a ?9 **?.,t?il 00 69 CV .TBI.itfl nu SCI 1 mi on, aiw. nw uo 4 19,230 (?1 ts?,tag iu 7."i c< 4*9.444 14 bSkfiBO -i :.7i ?>!?.! ivs i.l.-1 .12, Tri .^AS 21 K.'. P. G91.9M II 74H.I? 17 7;ii,i>?*. 10 949,069 M H7?.?UiJ 4* SI mi 925,131 63 laavoKi '.'t l.mC.MI 70 MilU. if S f p JfJI.WU 8.1,000 l iolion lmi>a UrL.lwr ai. In<>t. 1:11,799.60. Th!? tni'lo. im hss been seen, has l*eo*i based upon your reduction of the public debt by ii scaling process, tu it maximum t?l even the largo amount i?f 3) ?J.oo?.U?ii, whteit amount I liavo selected simply tor Ute pur posc ul illustration. rAXATIOK. Taxation w deilned us the taking of private property for public use. The exercise of this |k)Wit is always regarded by the individual with a jealous eye: ?ml is a subject of especial interest. It Hilt-eta in its operation every individual who forms a cpm{>otient |*?rt of the body politic, whether ho bo the owner of property or not. The disotiasinu of tho various systems and tho bent methods of taxation, engrosses the attention ol the slates men of thu civilized world. Whether tu "proud Britain, ru-nivo France, impeiiai ' Busala or fovorish Italy," ii is at the presonl momeut a question of all absorbing interest. Tuxaliou, In somo form, is as ancient in origin us society itself. Xo civilized coin intiuitr con exist without taxation. Hud no high degree of civilisation is attainnblo with out comparative Uirga tu.ifion. Tho principle, Isid down by Adsra Smith, which has been engrafted upon tiiu ftinda mcntal laws of every civilized country, "that the subjects of every Slate ought to contri bute towards the support of the government as nearly as |>ossible in proportion to the rurenu'j they routwciivoly enjoy under tho protection of thu Statu" U u truism univer sal!/ accepted. That system of taxution. j therefore, is most jUSt Ulld equitable. Mild ' losst oppressive, which is to framed na to carry this proposition lulo actual operation. Tho constitution of this Slate evidences the intention ot its trainers to illustrate this prin ciple in that seetiou which provides for a tmi/orm ami o/isW rate of asses si a* tit an 1 laxstioa, and which declares that all property, real, personal or possessory, shall bo nul>i:ct tn : i .<(? u This system of taxation succeeded tho sys tem, or rather luok of system, of tho reudal ages, when all pro|?vty waa hold ua Hefa 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 each lord was expected to furnish his quota of troops and bear his shin- of the expense. Justico was administered by thu lords proprietors, and the measure of justice looted not was regulated by tho ability of tho ihm sou so do siriug lo pay for it. Among the Hebrews, during tho timo of Solomon, taxes were levied upon houses and transit taxes and tariffs on the introduction of foreign merchandise. So oppressive was the j .system of taxation thon that it caused the stoning to death of Adoram, who was "over I tho tribute" and the secession of tho ten [ tribes. I In the A the a ia ii republic no direct taxes wore levied upon real or personal estate, hut rovonuo was derived fioin tho sale tsT public laud, lines and confiscations, ami a capitation tax upon freedmea and foreigners, dunes upon foreign commodities and merchandise. In Home, utidtir thu republic, Iho s|>oils of conquered nations and the unuiiul tribute re quired of them, paid the expenses of the gov ernment, but under the empire portions of tho revenue were sequestrated, capitation taxes levied, taxes on corn and heavy sums exacted for tho privilege of Roman citizouship. In France, prior to the revolution of l ?!?.-), the nobility und clergy wero exempt from tax ation, und the burden rested heavily and with crushing weight upon the poor. Resort was often bad to forced loans, snlo of monopolies, and even confiscations, to meet the oxtrava gnut ex*?euaes of the monarch. To return from thia digression as to tho va rious methods of tsxation of force at different periods of the history of the world, the sys tem of tnxation which now prevails is pre eminently superior in that the burden is equal ized, each individual contributing hi.*, share of the expense of the Stato in proportion lo the protection of life and property he onjoys un der tho laws cf the State. It will l-e admitted by all that taxation is a ar.'.'.?toi y uxpenso ; it is also a desirable ex peuao. "It can probably lie demonstrated," It has been said, " thai there is no one set which can be performed by a community, which brings in so large- s return to the credit of civilization and jjeneral happiness, as the ju diciotia expenditure for public pur|voros i>f a fnii percentage ul tlio general wealth, raised by an equitable system of taxation. The fruits of such L-xpeifuiftire are general educe lion, and general health, improved roads, di minished e\|K'iises of lrHus|Mirl'ition, ami se etiriiy for Iii t und property." Taxation .s nut therefore an unmixed evil, Which every olio should make it bis tllltV to avoid. The tu*, gatherer is not. us some assert, the natural enemy of the lax payer. fn the eloquent language of lb-ems: "I donot look upon taxation as uu unmixed evil; the etouds that gather ulajve us in the lioaVvtis, ilark as they may seem, doiiMj as they may he. have yet their golden edge and silver lining. These clouds uro tho taxes of the cjith to support lite great economy of nature. They suck up the exhalations from myriad fields aud hillsides; they absorb the mists of laomhig and the ddS/S of eve; but they do md roll the earth, they despoil not the meadows which they assess; for through I the wonderful chemistry of the skies they re turn in fertilizing showers, they are dispensed iu rivulets and rivers, to make tho wilderness blossom as the rose, and tho harvest fields laugh \\ ith fatness." Kveu so. under u wise economy of public administration, the revenues of government oppbud faithfully, legitimately ami honestly may return seven lol!. mid produce new fruils of general prosperity. But aays some tax payer, " I admit tho necessity 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 tho llOti-property holding class of our citizens, have been inconsiderate and careless iu the. levy of an exces-ivo and biirdensomo rale of taxation. Taxation has increased at an oii.irmons rale sinco the palmy days ujmt M/a/S, and to a far greater extent than is uoeoasary to meet the public requucinonts." I<ol us enquire how fir this lax payer'a assertions are correct: ? Under tho anomalous system of taxation "in vogue during tho palmy days ante bel lum," real estate bore but an inconsiderable |K>rlion of the public expense. That species of property wliich paid the largest annual premium upon the capital invested, could best afford to boar the burden of taxation, and houco ihe revenues el the Stale came chiefly from the tax on slaves and an urb'trary tax upon tree pei.-ous of color. For iustaiico, $000 invested in a healthy male slave would realize yearly at least $170 upon tho invostment. The owner could therefore well afford to pay the tax imposed, us in 1S00, of $1 20 upim his negro slave. In I860, nccording to tho iviisus of that date, there were iu South Carolina 402,406 slaves, yielding to tho Stale a tax of $1.20 per bond, or $507,031 50, and 0,914 free persons of color, paying n tax of $3.00 j>er head, or $2!?,74'.\ making a total rcveuuo from taxes upon slaves and fiee persons of color of $530.773.00 or nearly niiio-tcuihs of tho entire amount necessary lo curry ou the government. Tho practical workiug of ihis system was tho fostering and building up of a largo ami pow erful landed aristocracy ; a man's tillo to rank mid social position de|>endcd upon bis princely acres. Tho greatest boast of iho South Car? liua gentleman was his inheritance of vast landed possessions, the hunting grounds of his fat hoi s, the pride of Iiis children. The comptroller-general, in his report to tho Qeneral Assembly for 1SC0. : taied that "the tax on all tho laud of the State, amounting to 17,658,401 acres, produced only $S2,&16.&1, which is loaa than au average of rlvo cents porscrel" Vuluablo cottou lauds which the owners would not have sold for hundreds of dollars an acre, wcro valued for the purposes of taxa tion at tic cents; por aero. Now, human slavery is abolished. Millions of capital invested hi human chattels have been SWCpt Olli of OXistCllCO With a aitlglo stroke of the |>eu. Somo othor species of proporty Bust bear tho expenses of tho gov ernment in its stead. Winch is it? The ex perience of the civilised world answers that tho Irno basis of taxation is real and persona! estate, and tho new regime hi conformity to that experience has adopted that system for the now order of things. The practical operation of this now and equitable system iu South Carolina is the samo as thntoxperiencod in tjm_Nortjj_a^ju^ ago. The taxes Till chiefly, whcro they be long?upon real estate. The owner of real estate caunot afford to keep thousands of acres idle and unproductive merely to graiify Ins personal vanity, and because he inheritedthem frutu his fathers and pay the tax upon them. .Stem necessity, therefore, will compel him to cut up his uncestr:.! possessions into smr.Ii farms, aud sell to those who can sod will make ihom productive; and thus tho masses of the people will become pmpa ty holders; wealth will be more widely ditTused : the peo ple will become more prosperous; immigrants will come aud settle amongst us aud develop the vaSt resources of tho State. Tims on ward the march of civilisation makes its v:ay, and no cry by the large real estate owner oi excessive taxation can stay its progress. but aside from this view of the question there is another which I will now present. That the aggregate amount received from taxa tion siia-e 18G0 has greatly increased, is a fact which none will deny ; but this is also true of tho rational government, uud of every .State ol the Uutou. The question is not whether taxation has or has not increased, but whether tho comparative rate of increase is crealer iu this than other States of the Union. Tho following table will show the incronfo of taxation between thu years 1860 aud I.S70, iu rive Democratic States, as shown by the ninth census : States. Aggros Tsxstioo, rncrrssrln Av r?ar I v.' IsTO. lo roars, sri. tucr'a. i G-?rg!-s ? ?.-.< ::.?..' f*.? tt MO iv:,i.r.Mv. i,ies,Tsa s,.i3i,&79 <os eotviu , Marylano, t, 103,980 6.?5.,?9?0 2 80 W - Kentucky, x.i4s.*4l r..7;i>,n-. i?e 16 6-W Mlssuart, I.iwm IS.vaS.tys X.H 21 ?10 ?)? aural avvraz<- sunns) Increase, So 010. iso?. 1?70. 8. Carolins, f l.ttO.Ss? i'i TO: 8T5 ?1.10 11 6-10 Thus it is seen that while tbesvrsrsge an nual increase of taxation in those five fitate9 has been 20 6-10 per cent, iu South Carolina it has boon only 11 6-10 percent. The aggregate taxation of the national gov ernment has increased from $94,180.716, in I860 to $280,591.621 in 1870, or on uverago annual increase of 19 4-5 per cent. The following table will exhibit tho per capita taxation in several of the States, (a* shown by the ninth census.) aud by tin - table, also, South Curolina gains by the com parison. Suloa. Piipu- AgBYrgate Pet Uuon. uxttlon. capita. Massachusetts, 1 4.VI .Cl ?:i ..-.->> 816.84 Now York, 4,SsS 7.ii 48.NVi.S0S ll.flp Ohio, X.O?.\.a.i 28,f??.Ms s.75 Maryland, Tsn.sj4 S,6tt?4i 8.40 Kontucky, l.a.'MUt r.,7Sn.lis 483 South Carolin*. 7u,\Ot-H ?,167,073 8.02 Tho per capita taxation of tho United Slates, according to the ninth census, is $7.27. The State of Nevada with a jper capita taxa tion of $19.40. aud tho State of Florida with a per r.-piUx taxation of $2.64, probably re present the extreme and mean of tho ptr capita taxation of the different States. Tho average per capita taxation of the thirty-seven Statest comprising the American Union is $7.27, or $1.36 more than that of South Carolina. . The foregoing illustrations prove conclu sively that the rate of taxation in this Stnto is not excessive, nod that the increase trinco I860 has not l>eon greater than tbst of tho United Stales or tho several States. It will be noticed from the foregoing tables that the State of Massachusetts, unquestion ably the best gvctntctl State of the Union, is, with one exceptioc, the highest tsxod of any State of the Union ; and, notwithstanding tho magnitude of taxation, do nggregnto receipts have not l-ftci' sufficient to prevent an nunu.il increaso of the public debt. CONCLVHT?X. ' Senators and Representatives, permit me to express the hope tbst, while differences of opinion, incident to the right of free discus sion among independent and untrammelled Legislators, will 1>< asserted in your respec tive Houses as to tho gram questions pre sented for your consideration, your delibera tions may be marked by ai. earnest and undi vided purpose to ndvsnce tho common inter est of tho people sod tho true welfare of the Slate. And to these ends I sincerely invoke npor. all your counsels tho benign guHanos of an Omniscient Providence. Fr isvtus j. Moses. .Tit., OnMnuw ,.f ti..al> r-..,.,i:....