The Orangeburg news. (Orangeburg, S.C.) 1867-1875, October 21, 1873, Supplement to the Orangeburg News, Image 5
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:....