Historical Newspapers of South Carolina

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fepudlutlou in name, that mioh delay will bo incurred oh will muko iho accumulated debt so largo thai Ihoro will bo an indisposition to touch It, that no/i action will lead to Una] refusal to pay. I earnestly hope that (Iiis will not bo tho case, but I feel it my duly to sug gest tho danger. It would be best lor all par ties to look the dilUctlltlofl squarely iu the lace, and muko a full and Html sottlomout, by con verting till the outstanding issues into a con solidated debt, upon which tho interest- would bo paid without failure. Tn my opinion tho Creditors would bo willing to accept such an isauo in satisfaction of their claims, provided too great u loss should not be inflicted upon thorn ; and certainly, in view of the constitu tional obligations, us well as regards the honor and good name anil tho material interests of tho State, tho General Assembly should meet them half way. * * * * * "When Buch Hub! adjustment shall he made, it will no doubt be supported by the good men of all parties, and will bo acquiesced in by tho people." PLAN OF AIMl'STMKNT. It is a well established principle of political economy that an individual having money to invest will make an investment in that class of "securities" which oilers the best.guarantee of safety?securities which will not only pay a premium upon the 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 upon tho confidence of tho purchaser in tho good faith of tho State, but more especially upon the means which tho State places tit the hands of every holder of her bonds, to compel tho punctual payment of the interest as it accrues, and the principal at maturity'. The SUito is soveroign and cannot be sued; but when she enters into u contract With 011 individual, through her agents, and directs said agents to jierform certain duties iu fulllllmeut of that contract, such individual can compel (ho agents of the Slate to execute tho will of the Stato us ox pressed in such contract. Thus, in throe-fourths of the States, when ever Iho lluaucinl officers are authorized to create debts by tho issue of Stato obligations, tho machinery for the punctual payment of the interest ami principal is provided us a part of tho contract ; and every individual who accepts such obligations in exchange for tho moneys ho advances, receives a remedy? of which the obligations themselves are the evidence?for every neglect of duty in tho premises on the purl of the intents of the Stato. Such nn obligation oilers the best investment that could possibly be made, inas much us tho holder thereof has a lieu upon tho entire property of the citizens ol the Stato. How is it with the Umdod debt of this State ? Our debt may be divided into three classes. Tho tlrst class includes all those bonds, (ori ginally Issued,) of the live classes enumerat ed in tho decision of Ihe Supreme Court upon tho Morton, Bliss and Company mandamus case, amounting to $3,519,000. The second class Includes all those bonds und stocks whoso only guarantee for (ho pny moot oTprincijHtl and interest is the good faith of the State. This class comprises the old bonds and htoeks, (except Blue Badge bonds.) the bonds for funding past due interest and principal, and funding bills Hank of the St ile, und amounts to $4,513.503.35. The third class are those for which no }na vision has lieen made for the payment of and includes the lilue ltidge bonds, (tho ab sence of the guarantee in this instance being probably pt. oversight,) and tho conversion bonds issued directly by saleor hypothecation. This class aggregates $0.905,000. This concludes the his ory of ihe character of our bonds. I?et us now enqufro their pres ent market value. Our " January and duly bonds," old and now, which comprise the entire amount, ex cept $2,189,000 of " Aprils and Octobers," aro quoted at llfteou cents. Tho latter, being a poriion of those recently before the courts, are quoted at twenty-three cents. Now it ?ib evident, from the arguments pre viously udvnuced. that the Slate is unable to pay the interest upon tho debt as it .stands, and that it is to Iho interest of every bond holdor that tho debt bo reduced in volume lo u reasonable limit, go that tho payment of interest may bo resumed. If, when iho hold ers of our bonds und slocks agree In surrender them for a new mid consolidated bond or stock, tho Stuto agrees us a part of the contract (or which such bond or stock itself would bo the evidence) to provide for tho payment of tho annually accruing interest and for tho extinguishment annually of a por tion of iho principal until tho whole shall be thus redeemed; if, iu pursuance of .such agree ment, she instructs her agents (whoever may represent her fioui the dale of iho contract until the debl is entirely extinguished) to levy and collect annually taxes sufficient to pay said interest and retiro a portion of the said principal?if site instructs her iigouis as aforesaid to disburse tho funds so collected to tho purposes aforesaid, and if embezzlement or divorsion ot said funds be made a felony, pun ishublo us Iho Constitution directs, it is evident that il would be to the best interest of the bondholder to accept willingly such a compro mise. For if these romodios he placed in the hands of every bondholder it is evident that while his new bond would represent upon its face a sum equal only to two-thirds oronedinlf the faco valuo of. his old bond, the market valuo of tho new bond would undoubtedly bo from oiio-tliird to one-half greater than the present valuo of iho old. For iustanco, if $3,000 of old bonds worth 16 cents on tho dollar, or $450, be exchanged for $2,000 iu now bonds worth at least 40 couts ou tho dollar, or $800, the holder will havo made n clear gain upon the actual value of his bond of $350; and agaiu, if $8,000 in old bonds worth 23 cents on the dollar, or $690, bo exchanged for $2,000 iu new bond worth at, least 40 cents on the dollar, or $800, tho holder will havo made a clear gain upon the actual value of his bond of $110 ; and in addition thereto, tho payment of the iutoresl and redumption of the principal of his new bond will be amply secured Im romodios iu his immediate possession. Before'proceeding to discuss the details of this plan of adjustment, il may be useful to examine tho history of the different States, aud enquire' whether they or any of them wore not at somo period burdened with debt even as South Carolina is to-day; the method adopted to relievo themselves of that m dobteduoss, snd tho practical operation of such method. The Stato of Indiana failed ti pay the in terest upon her public debt Moni 1 11 to 1847, during which time aim required -i re putation for bankruptcy und repudiation, from which she ouly recovered after years of deter mined effort and iho faithful discharge of her obligations, hiko most of tho Wostern States at that time gigantic schemes of internal im provement, schemes for subscribing millions ' of State bond-, to build canals and railroads for tho development of tho great West, were rushed through tho l<egi?hitoro without the sllgbtost consideration of their feusihiliiy. And in Indiana, as in most of bur sister Stuten, those bonds woro hypothecated und .-old for n mere song. The Utopien achomos of developing (ho resources of the State vanished into thm air, and the railroads aud canals could be found only in the buneombo speeches of (hair advocates. In 184Q ijio noonlo realised their iruooou?; tlilion, Wit i|oi bctoto tlu-v had ho<-n l'midon <. Willi w debt of $l l,oOo,oo(i, Ik>:i1im the im. j tei-.st which hud boon uceiunu! itiug foi'.ii^ I yours'. Tho Stuto then made a compromise I "with lit'i ooiulliotders, in whieb ahc ogiec 1 to transfer lier titlo to tho Wiibash and Ki'lO Canal in liquidation of onodndl of hor debt und to issue ccrtilicateH of BiOCk, beat ing live per rent, interest ut'ler 1854, lor the other halt. Tho Legislature solemnly pledged tho faith, und funds df tho .State for tho punctual pay ment ol thu interest nud principal; and afterwards solemnly set apart all tho revenues of tho State derived Iron) taxation for general Slate purposes, after the defraying of tho ordinary expenses of the government, lo the payment of the interest and liquidation of the principal of the debt. This compromise and contract was afterwards confirmed by the people at the ratification of the "New Con stitution of 1850." Hvou tho old creditors of tho State who were not directly interested iu tllCSO schemes and held none of these queslioiisbhl bonds cnuio forward tviilingly lo relieve the Stntnof the foul slain of repudiation, ami mado i Bttcritices of their pecuuiary interests which ! made the compromise possible. And now, by the filillllul performance ol the terms of this compromise, her credit has been completely restored, and .-.lands iqioii a perfectly secure basis; nud without oppres sivo taxation her debt is being very rapidly extinguished. The history of tho lluancos of the State of Michigan furnishes another illustration of a coniprotniso effected between a State and her creditors. The coirprotnise made by the State ol Indiana was made at the suggestion of the bondholders and with their hourly nssent and co-operation; ihui of the State of Michigan was made without agreement, which the bondholder was obliged to accept or gel nothing. Her Uuancial troubles begun in 1840. The fever for issuing bonds to build railroads und canals raged nt that time us an epidemic throughout the entire West. Like a prairie lire or m swarm of thu dreaded caterpillar passing over :i cotton plantation in ihe South, its appearance was us sudden, its march as rapid, its desolation as complete. Iu 1837 and 1838 Michigan issued $5,200, 0t)0 to build canals Olid railroads. The Gov ernor made arrangements with n banking company to UCl as l!:-.1 iigenls of i he State in tho negotiation of the bonds. The company negotiated a portion of them and made the proper returns to the suite; the moneys were payable iu installments. Tho Mate was enti tled lo receive about $2,857*030.70 on tho remainder of bonds in hands of llto company, when suddenly it collaps? d, und it was dis covered thai the whole amount of bonds had been hypothecated or sold, hud passed into the bauds of innocent part it s. and wen? out standing as a CliargO against the State The Governor publicly called upon ihe holders ol tho bonds either to pay the balance dim ii|kiii them by the company or surrender Ihctn and have the amount they paid for them refunded. The Legislature of 1S-41 continued the action of ibe Govoraor and again demanded tho sur render ot* ihe bonds upon the lei ins before mentioned. A portion of the entire sum of $5,200,000, amounting to $1,887.000, were mil included in the demand for the reason pieviotisly given. The bondholders refused to accept the com promise and no further actum was taken until 1S4?. At that time (March, 1840,) tho State sold her railroads and received as part pay some of these pnrt-i>;iid bonds, scale." lh? principal at tue rate ol $40.5.89 per $1,000 m bonds, and the interest Ul the rate of six |ier cent on $302.13 for.OHCb $1,000 of said bonds. Iu 1855, the bugislaturc directeil the trea surer lo notify the holders of said bonds, by public advertisement, lo surrender their bonds within six mouths, as after that time no in ter si would be paid. The six months expired August, 1855, ami from that lime the bonds have been adjusted at the rate of $578.57 for ouch $1,000, There are still outstanding $54,000, adjustable at $31*242.78. Lndt-r the operation of wise legislation, amplo provision having been made for ihe payment ot iy\o interest ami extinguishment of the principal, by solemnly setting apart a portion of the iiiuuial revenue and the levying of n spucillc annual lax for that purpose.?tho credit of the Suite has been completely re stored ; tho resources of the Stale nre large and annually increasing, while tho debt is small, taxation light, unit no occasion to make it oppressive, The iiuditor-goncral in his re port of September, 1871. slates that lltO sink ing fund was large enough lo furnish the menus ol' redeeming all ihe bonds outstanding before their tnatui ity, if the holders could bo induced to surrender them, und the Governor, therefore, rccqimnoitds il o repeal of tho set levying 11 sj>ecilic tax for hint purpose. TllO history of the liliauCOB of the State ot Illinois is worthy of especial notice in tins connection, us in several respects she prissod through a similar ex pi rioucu to our own. The success which rewarded that band of patriots who combined to restore the credit of the Stale, and to lift ihe cloud of suspicion of re pudiation which resied heavily upon her. might wtdl furnish n lesson to the citizens of this Stale who have her best interest at heart The financial troubles of Illinois occorrOil prior to the adoption of tho constitution of 1848. S'.e had neglected for a long timo to pay tho interest upon her debt until the prin cipal and its interest accumulations amounted to Ihe enormous sum (so considi red at thai tune.) of $18.(100,000. Parly lenders im peached tho validity of ihe debt, und recom mended that the iieoplo refuse lo provide for its payment, wjlilO tiio tax payers relieved from taxation lor one purpose, vigorously op posed paying any taxes al all. The distress ing condition of tllO liuaooes is filly portrayed in the report of ihe auditor of UlO State of IVevmber, 1870. Saul he: "-To those who can reiuetpbcr the condition of the State of Illinois iu 1M7, the treasury empty, the Gov ernor borrowing money upon bis ow n credit to pay the postage on the loiters written on the business of the Stale, her bankruptcy known aud sneered at all over the world, even her honesty of purpose doubled, anil some ol her own sons trying lo bring her lo the infamy of repudiation; the simple state ment of these tacts requires no comment lo make I hem finprossivo. Who can not m-< that tit least in the case of States and nations honesty iH the best policy." The Legislature by net of February, is 17, anthorh-.ed the refunding nf the Stale riebt! the preamble of said acl is quoted here, us il shows in a nut-shell the exact condition of the debt. " Whereas iho Slate of Illinois bus nt vari ous times issued a huge amount of internal improvement bonds of various classes yet bearing the same numbers, ami having inter est coupona thereto attached similar in num ber nud description, thereby causing great confusion and opening a wide door lor fraud, and rendering if extn nic y difficult to pay tho interest to those justly entitled thereto; and whereas, also, from :t want of a full and per fect n-cird of the classes, numbers, Olid de scription of the bonds so issued, il is impossi ble at the present time to determine lite pre cise amount of ll ? indebtedness of Iho State, ils character, and vhen payable ; and whereas, it is of iho highest importance that ihe actual nmotini und character of the present Stuto debt should bo accurately asccit:\ined iH the onrliest possible puiiod, preparatory to a more united and vigorous exerlion for its payment, and to enable the Conversion for altering tho constitution (about to assemble) to mako some t-?V<itinto iuut?iiv?itluiittl provision for Uie>puy-. nunt-pf lli'il'i .lai'-al u|iei> duo. UV ucc?tjiug mloi.i?l aud In?' htetflttsi iii a Wear; therefore " i^* ? i \ ? & \ ? * ' IMler Ii i* :n t Tie otltim dob,t was funtj ?ed. i vOt'i i u ritiiu bonds ?ml sprip kqp,wp, as Hie Moralisier ;.:.tl Stebblnt) bonds und scrip, canal bonds, and oilier evidouoes of indebtedness of tlio Illinois and Michigan equal. New iu.orual iniproveineut scrip was i .sued for tho old dobt, equal til amount and bearing like interest and payable at tho same time as tho bond or scrip surrendered. The ''Mticulister and Stobhins bonds and scrip" amounted u> $!M .t,215.44. They tamo into the possession of said Iii in as the agents of the State. Tlio Stato received for said amount $261,660.83, or nbout 28 bt-loo cents, whereas liny were entitled to recoivo accord ing to ugreeu.ont about 40 cents on the dollar. Tire Arm refused to pay the balance, and the Legislature iu February, 1840,In structed tlio Governor t<> compromise the matter by offering to fund tho amount actually advanced upon the bonds with 7 por cent, interest, from the dale <>! iho udvattcc to the time of funding; and notwithstanding these bonds had passed into llio bands of innocent holders, the Slate refused to recog nize any further liability upon them, except to the amount of 26 cents on Iho dollar with 7 per cent, interest. This arrangement wns acquiesced iu by many of the holders and most, of tho bonds have been funded at said rate. Tho constitutional convention of 184S submitted to the people the billowing amend ment, which was ratitied by a large majority of voles: '?There shall tie annually assessed aud col lected, iu the snmo manner as other State revenue may be assessed and collected, ll tax of two mills upon each dollar's worth of taxable property, in addition to all other taxes, to be applied as follows, to wit : The fund so created shall be kept .separate, aud I annually on iho Ural of January, be uppor | tinned and paid over pre rata, upon all such Stale indebtedness, oilier than the canal aud School indebtedness, as may for that purpose be presented by the holders of the same, to be Olltoied IIS credits upon and to that exto.it in extinguishment of said indebtedness:" The llrsi lax under ibis provision was col lected in 1849-50; the credit of the State ; immediately revived, and in 1852 Ihe Stale i entered upon an em of prosperity unprece dented in tho history of any oilier Slate of the Union. This feat uro of the constitution operated beiieticinlly to the lav payers in a manner entirely unforeseen. As the Slate grow iu j wealth Ihe two nulls lav. the collection of j which was imperative. In'gan to realize n I larger sum than the State could annually apply to the extinguishment (if Ihe debt, a:; the I holders rofliscd to surrender ro valuable a j security nutil compelled to do so bv its iuj i ttirity. It became necessary, therefore, in ! order to avoid the collection of an amount of 'money under this lav in excess of what could ! be actually applied yearly to the extinguish i nicnt of the debt, to reduce the valuation of property us low as possible. The State nudi I lor. iu his roporl lor I860, estimated thetuxu i bio property of the Si ne to bo assessed al I twcuty-llvo percent, or one-fourth ol its actual J value. The last levy under tins provision of iho : constitution of 1848 was made in 1870. Tho I moneys now on hand, together with ihe rev i enue from Ihe Illinois Central Railroad, will be ?nitro .a;. t? .......-.1 .1,. r-ntl-t I iudeblediiess at nmturity, winch amounted oti i the "In day of December, 1872, Iu $2,060, ; 160.08. i The foregoing illustrations are sufficient to I show Urn manner in which several of the. 1 Slabs got into debt, the means I hoy used to i extricate themselves, and with what siiceosa. I Tho lesson I hey touch is too plain to require , comment. Having looked at Unit picture, lei IIS OX - I amino tins : i The State of Minnesota, in 1850, authorised j iho issue of $5,000,000 of bonds in aid of cor ? lain railroad enterprises. The roads wore noi ! built, bill the bonds were d Kposcd of. The I State refused to recognize tho validity of iho ? debt or provide for iho payment of interest or ! principal. 'Hay have beeu practically re | pudialed for fourteen years. J The bondholders hove ui.nl.? repealed efforts , to effect a compromise, but each and every i effort has beep iiuaucecssfiil. I The present treasurer, however, states (hat , he dosiroa ihe matter to '?o settled and is en j quiring as t<? the best method of adjustment. From tlio report of tho oointn tteo on fin ance of tho constitutional conveiitioD <>f lso8. I of the State of Arkansas, it np|ieara thai suit! I State had rirtudbj repudintoil her debt lor i thirty years. In reply to the quest on I " What is the present Valuo of our State bout!*," the committee reported "That tho i bonds of tho Slate of Arkansas are not I tpioted iu the market ol any city of tho ritt I lizetl world. This is attributable lo the tact I ilia* iu a period of nearly Unity years, the j Stale authorities have not provided for the payment of interest nti her bonds. A system of i tinanciering knownouly to thieves and robbers l without cbuacicmc pi evaded to such an extent i 11 nit their o iterations now cost the State the i neut little sum of $fi, 104,601,16. Not content I with impoverishing tho Stale, daeoliiting tho j country,and Ciiisiug mourning at every hearth* i stone, we timl these Self-same men arrayed in hostility to tlio present reconstruction I measures, hoping thereby to hide from tho I public gaze aud llivoatigatitm, tho plunder -nod thefts ..of. thirty years I * * * * For years the levy of the State tax Was light, the people ttioiiylil the government was well mid economically iuoiiagcd, by letting the bonds run for years without paying any in terest, aud not seeing any appropriations lor the |iuyiuoul of iulorost on those bonds iu the disbursement of Iho public funds, il is iu I strange lh.it they forgot tho indebt edness of a prior generation." It is piopcr lo add Unit ihe Stale authorities referred to, who were responsible for that dobt, belonged to the Democratio iwiriv. The reconstructed government has recently made provision for the funding of iho debt, hoping thereby to reutoro tho ciedil of tho State. The Stale of Virginia has not paid all the annually accruing inteiest of her debt for years, and it is only recently that ll.e public have been made aware (bat ihe volume of debt has been largely augmented by the ac crued interest. Virginia has tuen under a Deniocraliu administration lor years, ami. like tho laws winch coutrol the animal ami VOgO rablo kingdom, the nearer Iho debt approaches maturity the larger il grows. It is strange indeed thai those who created and controlled the debt, ami who still hold iho reins of government, linvo made such in adequate provision for the payment, both ol interest und principal. The debt of Virginia is ropottud to Ik-, in round numbers, $ i7,ooo,noo. Tho Legislature, t-cssion 1871-72, provided for the payment i>; J per Centum of inteiest upon ItOlidd entitled lo 0 per ceutuin <>f in terest, und lji per ecu I urn of interest upon bonds entitled lo 6 per centum. Ibis is tho bOSI they have done iu flcfcIlSe of ihe linail pial honor of tho State. Sufficient has boon written "lo point n moral." I.ol US now return from tho study of tho conduct and management of Hie debts of other States to the paint wheuco wo started, viz: thp adjustment of our own dobt. Oovornor Orr, in hit annual message to tho Jir>i(i><iui.?t/f> (hohk'k.i. i.r if*;-;), matT,?"?\fi$~u)\u>w iihr ru4x>iii|pL'ml:iiioti* in p;ruid lo t'??? public defy: 1 |t in, however, onibi cully proper that some lineuulal scheme shotiM bo now adopted to propuro tho Stuto to meet tho principal of tho dobt us il falls due. II' the mtercet is regularly paid ou the debt, $IGO,000 annually not nparC as a sinking fund lor twenty years, Invested In huI'o securities yielding six per cent, per annum, the princlptd being further increased by the icvestiuoul of the interest annuully accruing, w ill Bccuuiulate the sum of $3,890,312, which will bo nearly udequate to the payment of the entiro debt then duo; and I recommend that proper legislation be adopted nt tho present session to inaugurate this schome. "Under tbo act of ?September, 1H0G. provi sion was made to fund the interest on stock issued under the authority of tho net of 1803, to continue tho construction of tho new i State House ; tho whole amount issued was SC-M.S'JO. Tho issue was not made until some lime during the year 1864, when there was a heavy depreciation of tho currency and w hen labor and material wete in a cor responding degree appreciated; $100,000 weie Issued in 180'.! tinder authority of the act of I stw, when labor and material hud appreciated very little. In my proclamation I excepted theso two issues from immediate (muling until the General Assembly met und determined w hether tlieao stocks should U> scaled to the rrnl i'ulue received by the SUUO for them when issued. The contention adopted a rule for the government of trans actions between individuals during this time, w hich was just nnd honest, Slid no reason is perceivcM why tho same rule should not l>o applied iu transactions between iho StHIO and its creditors." From Ihe above, ii appears that Governor Orr acknowledged thai ho provisions hnd been made lor the payment of the principal of the public debt, and realized tho necessity for, and wisdom of", utoktug Immediate pro vi?iolis therefor, lie also conceived it tobe just nud proper 10 scale a pottiotl of the public debt, and ii?>k the responsibility upon himself to exclude them from the bonellta of , the funding nets, until the Legislature might meet aud lake action tliorOOti While it is true that the Legislature dis regarded his recommendations, every one will admit their soundness. They are quoted bete : for the purpose of showing that a precedent has boon established for tho reeommeudalioiis which lollbw. 1 r. commend >, First. That all the bonds of the Stale for which the Stnto is actually liable, less $.18,000 Slate capital bonds of HO.! pnst duo, lo be otherwise provided for, be scaled in thu fol I lowing manner, to wit: Thai tho State treasurer bo authorised, and j instructed to receive from Ihe holders willing to surrender tho same all the bonds him slocks of ih" Stale previously issued und now outstanding ngnin-'t the state, (not including the Slate capital bonds before referred to, and bonds known us "Conversion bonds" issued directly by sale or bypoihee.ition, the numbers and denomination of which will more fully appear by reference to the treasurer's registry of bonds iiinl Mocks converted, or issued directly, nmouuting to $5,960,000,) aud Khali thereupon in exchange for nnd in bou of said bonds or stracks so surren.h ied, issue to said holders oilier bonds or certificates of ul.vk, as they may tlesire, equal iu nmuitulto of the faro value id' the bond, or stork* so .-.II 11 llllt.'l Ctt. That the State treasurer bo authorized nud instructed to receive from the holders willing to surrender the same, all the bonds of the Stale, known ns "Conversion bonds," issued directly by sale or hypothecation, ihe number and denomination of which will fully appear by reference lo the treasurer's tt-gislry of bonds and stock converted, und issued direct j ly, and shall thereupon in exchange for and iu lieu of such bonds so surrendered, issue i<> I said holdois bonds or eortitlealcs of stock equal in amount to-of the face value ? ot tho bonds so surrendered, and no liubility i on the part ol the Stale is rccogui/ed turilit-r than is heroin limit..I and Oppressed Thal ib.* stato treasurer be authorized and instructed to rrccive from the holders willing t.< Bitrroiider tbo same, all Hie coupons upon the bonds before meullouo I, which have sc j crued or will see-no on the 31sl ot October, I 1873, and tho interest orders upon interest : tine upon certificates of stock as aforesaid lo i the date aforesaid, and shsll, thereupon, in exchange for mid iu lieu of such coupons or I iuterost orders so surrendered, issue to said ! holders bonds or certificates of stock eotial iu ! amount to-of thu face value of j the coupons or interest orders ho stir I rendered us follows: Coupons and interest | orders of the principal ot bonds aud stinks I scaled at-to l>o scaled iu tho aamu ; proportion, und coupons and interest orders of tho principal of bonds soiled at-to be scaled in tho same proportion, i That the State treasurer be instructed to receive from tho holders willing to surrender the same all the pay cortiflcitcs, bills payable, scrip, or other evidence of Stale Indebtedness outstanding against the State ou the 31st of ; October, 1S71I?except appropriations payable us deficiencies?and shall thereupon, in ex change for and in lieu thereof, issue to said holders bends or certificates of stock equul in amount to-of tbo lace valuo of the pay uortitlcatesj bills pays'db, scrip, or other evi dence of St.ito Indebtedness so surrendered : Provided ihm no liubility to pay the aforesaid pay certificates, bilh payable, and scrip or other evidence of Stato indebtedness is recog nised other (hau is herein limited and ex pressed Second. The bonds and certificates of slock herein nutliorized tobe issued shall bOariipou their (ace the words ?bonds and certificates of Stock," nnd shall nlso bear up .n (heir face a declaration to the effect that I bo paunoul of the interest is secured by the levy of an untiual tax, and the redemption of tho princi pal is likewise secured by o sinking fund pro vided for tho ptirpofO. which declaration shall be considered a contract outen d into between Ihe State nnd evory holder of such bond or stock. Said bonds nnd stocks shall be signed by tho-, countersigned by the and have the greai sen I of tho Stuto affixed (hereto, nnd there shall l>e preserved iu tho offices of the secretary ot Stale and State treasurer, a description of tbo amounts, dates, and lime of issuing said bonds, und tho IkmuI.s and scrip so taken up shall be cancelled by Ihe treasurer, and a list of their tlutos, Ii um tiers and amounts, and by whom signed recorded i.i tho offices of the Stuto I res surer and secretary of State Third. That the faith, credit and funds of the Stulo Ik? solemnly pledged for tho punc tual payment of the interest, and (Inul re demption of the principal of said bonds und Stocka, nnd for providing a sinking fund for that purpose. Fourth. Thel there shnll bo annually levied and collected, from until the bonds nnd stocks herein authorized ore extinguished, principal and interest, iu tho same manner and at the same time the gaiio ral State taxes lire levied and collected, a tax of-mills npon tho dollar of each hun dred dollar's Worth of taxable property in Ihe State, iu addition to all Other taxes. ihai Iii? fttnd BO created shall be kept Sepal ale frOtll all oilier funds Ulltl shall bo applied : Firat, to iho payment of tho annually accruing interest upou the bonds and stock's bei ein aul hol i 'od flcooud, o Hi>i|i'.it;i of autd fifud* r-m?dm iup in Uiv Dfi-h. ? ry. ufVr; Iba payment ul !?!,?.? ?aidj interest Ph?M" hv ? pp.led o:? or l/Mrp thu -???-----? of each rr>?V l^ theoAtc.^ili? incul of the principd oflfie p*M>li<* :*A,'t? follows- * * "v" ' -, hlull cunstituto a board of comnftfc aioiieM tor the management aud control of tbe -said surplus fu??<l for tbe extinguishment of tbe public debt. The said board ?ball give notice by public advertisement for thirty days prior to tlie of - of each year, that I boy have under their control tho sum of-dollars to be applied to the purchase of such bonds' or stocks as may Ik> presented lor payment by the holders thereof, on tho -of-, as aforesaid; provided, that said bonds b<; pur chased at a pneo Dot a bore their market value at tho limo of purchase, said value to bo ascer tained from the principal stock markets of the United States. Third, that the Ismds and stocks so re deemed shall t?e iuitnediutely cancelled by tho treasurer in the presence of the board, and l?e entered us credits upon and to that extent in extinguishment of the public debt. That a detailed stutvtncut of the number, denomi nation and series of (he bond- and Stocks so redeemed and cancelled, together with the price paid for each Isuid and stock, as afore said, shall ts? prepared by the treasurer, signed by the ls>ard aud furnished to the Ueuernl Assembly at tho oomuicncoiqciit of each annual session thorcof. That ombo/./.lcmeiit or diversion of said funds, whether directly ui indirectly by speculating iu said bonds, or puruhaiin^ them at fictitious prices, ho made a felony punish able by a line ol not more than-no: less rat - . - " ' 5."' im!,r-,""--'??t for cot more tleU*. "7' ?"? e,-..t:.HU-_, prop.-rtioi, ? IIa) uiuuW ciuoc/jrtoil ...r diverted and, . n?. ?" V l^'?*- ofleiidiiig shall l.o tor.:, * *,,r*-?fttr. dtsbitaiitlott from hold itift nii'v '' * u l-??'1*?. <or trt,?t under Iho constitutich,uV ieM (?<-mTal Assembly shall by U tu.j-thr.4i vot' TOievp. Ifim or thorn of auch (l^niMVte? J'^WV^l into tho treaihiJJ u!j \&> H-mo-ut ?o oiqbeyzled or diverted. It Will be ob.-???,'ad fuhat the plan I hav.j prq poiiod for the oxttit^atfalutieut of the public debt differs materially from the one proposed by Oovornor Oir. The scheme hero present ed is in successful operation in the host gov erned States of the Union, Kxperieneo lifts demonstrated that a sinking fund operating <u compouiul interest is itot only liable to great ubusc, but very seldom, if ever, accomplishes the object of its projector*. In the WOlds of Dr.Hamilton, of Aberdeen, " the iiicrcoso of revenue '?; th.'d luilllltiuil of expense are" the only means by which the sinking fund ean be enlarged and iu opera tions rendered more iffecttial; and all the schemes for discharging the national debt by sinking funds, operating at cum pound interest or i.'i any wlter UlunilDr, Ituloss so far as they aie founded upon this principle, nr by borr>W mg nionoy elsewhere at a cheapo. r..te ol in terest than at home, to redeem the debt at present worth, are e?ntjtUtrlij illutory.'' A forcible illustration of the ttorrootnosi of thlt argument njtjy bO futfml here : t hum?. The city of Charleston his sunk in her sinking fund llta sum of $H9I,C2l?l.t, wbieh was invested to compound iaturo-t and pay the city debt. The estimated value of the assets of ibis fund i- sot down at $246,901 20, showing a lo*? of "ti per cool, of tho amount (nveatod. Thun it uu3 actually wlded to ilitP debt which, ii was intended to extinguish. The plan hero pro|>oscd is freo from tho ohjociiom urged against tlio other. On i cer tain dato of each year, the etirphi s of n venue, after paying the interest due for Bitch yua-jetfl is applicable to tlie extinguishment, by tho ] purchase at its then present worth, of u por- I tiou of the debt Itself, "which amount so pur chased Will be immediately cancelled, and to A that extent each year the debt will be c.ctually J reduced. For instance, if one year after the passage^ of tho act herein proposed there be u siirpiujsfl Ol $50,000 to 1)0 Jlp| bed lo the , ? !...>r>!.-ttti>^^m of tho debt, und the I debt be titty cents on tho dollar, inc. bonii'iiH Commissioners could purchase ^lou.tiiu bonds or stocks having attached thereto :.i:.<^H teen years'worth of iiomaturod coupona ox interest orders, or $111.000. Thut $50,000 in cash would reduoe the debt, principal and interest, by $214.000. A If dating tho U'ttt'l year of t';c operation of^ tlii- fund, there bo $500,000 applicable to t'uo g* {?xtinguialiment of the debt?and we propose \ to show that there will ba that a it mnt?and m if the then present W?rth of the bonds be (M 1 hi'jh as 90 ceuts on tho dollar, the bonrtl Ol commissioners could purchiise $555,555 of L>onda or stocks, having attached there'o ten ye;?r? worth of unmatttred coupons <*>r in (orost orders, or $833,333; and $500,000 would reduce tho debt by $889,883. Even nt ]>nr $500.000 at this time wnuid ~* reduce the principal und interoat of the debt by $80 0,tarn. Tho accompanying table will exhibit tho probsblo operation of this surplus fund in tho extinguishment of tho public debt. TaMe Miowing (he P.obable Operation of the Six Mill lax in ihe Payment of (be interest and tliB Extinguishment of Ihe Princip.il of Ihe Public l ebt. _4 Klml. i*74 IH7Y. l-r?.^. If77 1"7< l?7-.? 1 VH.1 I MM ISSl issi.. ISM.. 1-s, I HUT. || K? INKS.. I ?VI 1K-JI imi\: . I*??.. 81? ii I7(I,01MI,I I > > 1,1 7tWJ l.'ti ^lli ,?17 JMl 7i?J .11 l ,4 Id .1'?? 1,123 .47J .:itl ,v?l t-7j." 7.rJ IHK. UNI >5>W ,4.11 Ml, l-<7. 4SO, 41! 370. r. i Hi Ml .*,*? K7? --?I ?17 -i.s U*> 4',m 7'. r-nti m.'. ConU. SI IK. Slilli. tCO.OiK) CWaitwa I.H..I i>ri..|-.i 31, |MM, t U.T.rj's'. Thin table, aa has been aeon. has been based ntvon your reduction of llio public debt by ii scaling process, t<> h maximum ol even the Urgo amount of SfJ.mi?.??d, which Mitiounl 1 have selected simply tor the pur pose ol illuMtration Taxation u dellued na the taking of private property for public u*e. The exercise of this |K)Wi-r is m I way a regarded by the individual with a jealous eye; and is a subject of eapocinl interest. It nffeets En its o|>erution every individual who form* a component part of the binly politic, whether ho bo the ownor of property or not. The diaotisaioii of tho various systems ami the beat molhods of taxation, engrosses the attention ol the states men of the oivilieod world. Whether iu ??proud Britain, restive France, imperial ttuasia or feverish liuly," it is at the present moment a queatiou of all absorbing interest. Tsxatiou, tn some form, is as ancient iu origin as society Itself. Xo civilised com munity can exist without taxation, and no high degree of civilization is atiaiunblc with out comparative Lvga taxation. Tho principle, laid down by Adsm Smith, which has boon engrafted u|h?ii the funda mental laws of every civilized country, ''that the subjects of okery Suu.- utighi to contri bute towards the support of the government as nearly a* pots:bio in proportion 10 the revenue they respectively enjoy under tlio protection of the State" Is u truism univer sally accepted. That systom of taxation, therefore, is m.>?t just ami equitable, and luust oppressive^ which is -<j framed as to carry this proposition Into actual operation. Tho constitution of this State evidences the intention ot iu frumers to illustrate this prin ciple iu that section which provide* for u imtform and ?}ued nuV of assess me ut and laxstiou, and which declares that ull property, real, personal or possessory, shall be ?ulject U> t'VUttk'U. This system of taxation succeeded the sys tem, or rather luok of system, of the feudal ages, when all property was hold as tlefs of the crown. Tho crown was maintained by the crown estates. The lords, or the original Sovereigns tinder the crown, exacted tribute from their serfs. In time of war t?ach lord was ex pee ted to furnish his quota of troops and iH-nr his sh ire of the expense. Justice was administered by tho lords proprietors, and the measure of justice meted out wss regulated by the ability of the person ao do siring lo pay for it. Among tho Hebrews, during the timo of Solomon, taxes wore levied upon houses ami transit taxes und tariffs on the introduction of foreign merchandise. So oppressive was the system of taxation then that it caused the stoning to death of Adoram, who was "over tho tribute" and tho secession of llio ten tribes. Iu the Athenian republic no direct taxes wore levied ti|>on real or personal estate, but revenue was derived from the sale of public laud, tines and Confiscations, und a capitation tax upon freedoms and foreigners, dunes upon foreign commodities and merchandise. Iu Home, tinder the republic, the s]x>i|s of conquered nations and tho annual tribute re quired of them, paid the expenses of the gov ernment, but under the empire portions of tho rovenUO were HCqucslrutod, capitation taxes levied, (axes on corn and heavy sums exacted toi the privilege of Roman citizenship. Iu France, prior to the revolution of 17!M, the nobility und clergy wero exempt from tax ation, und the burden rested heavily and with crushing weight upon the piKir. Kesort whs often had to forced loans, s.ile of tnouo|>olie#, ami even confiscations, to meet tho oxtrava gant expenses of the monarch. To return from this digression as to tho va rious methods of tsxstion of force at different periods of tho history of the world, the sys tem of taxation which now prevails is pre eminently superior in that the burden is equal ized, each individual contributing hi.-, share of tho expense of tho State iu proportion lo the protection of life and property lie onjoys un der tl.o laws of the Slate. It will ' admitted by ull that taxation is a netvasary expense ; it is also a desirable ex pense "It can probably bo demonstrated," it has been said, " that there is no one aet which can be performed by a community, which brings in so large-a roturn to tho credit of i .v XATIOK. diciotia ox pen liture for public purports of a l .11 percentage ol the tiClicrul wealth, raised l>y an equitable system of taxation. Tho fruits of such expenditure are general educa tion, ami general health, improved reads, di minished expeuaaa of trMiis|tortatioo, and se curity ibr lite and properly." Taxation is nut therefore an unmixed evil, which every one should make ii his duty to avoid. The lax gatherer is not. as aome assort, ihe natural enemy of tho tax payer. In tie* eloquent language of Deems: ''I do net look upon luxaiii n as an tiuinixed evil; the clouds tliat gather above us in the liouvetis, dark as they may seem, dense as they may I.e. have yet their golden edge and silver lining. t hese clouds are the laxos of Ihe eaith tn .-iiiits.it tho greal economy of nature. I'hey suck up the exhalations from niyriad fluids aud hillsides; they absorb the mists of morning and the ddWd of ovo : but they do not rob the earth, they despoil not the meadows wiiich ihev assess; for through the wonderful chemistry of the skies they re turn in fertilizing showers, iln y are dispensed iu rivulets and rivers, to make the wilderness blossom as the ro-e, and the harvest Heids laugh w Ith fatness." Kveu so. under a wise eoouoroy of public administration, the revenues of government applied faUhfully, logitimstoly and honestly may return seven fol 1, and pioduce new fruits ol general prosperity. liui says some tax payer, " I admit the nososaity tor taxation; I admit thai it is a do- 1 sirablo form of expenditure. Urn our repre sentatives coming, as a majority of them do, from ihu UOti-property holding class of our citizens, bate 1/ttu inconsiderate and careless ill tllO levy of an exces-ive mid burdensome rate of taxation. Taxation 1ms increased at an ojiofisaiia rate since the palmy days i/fdr Ml tun, nnd 10 a far greater extent ihan is ueceasary to meet the publicrcqmiomouts." I/ot us otiqiiirc haw far this tax payer's assertions ure correct; Under tlte anomal.ms system of taxation '? iu vogue during the palmy days ante bel lum," real estate bore but an inconsiderable portion of the public expense. That species of properly which paid the largest annual premium upon the capital invested, could best afford to bear the burden of taxation, and hence tho revenues of the State camo chiefly from the tax oil slaves und an arbitrary tax upon free persons of color. For instance, $600 invested iu a healthy male slave would realize yearly at least $170 upon tho investment. The owner could therefore well afford to pay the lax imposed, as in lsf,0, of $1 2ii upon his negro slave. In I860, according to the iviisus ef tint dale, there were in South Carolina 402,406 Slaves, yielding to the Slato 11 tax of $1.26 per head, or $607,031.50, und 9,014 free persons of color, paying a tax of $:t.00 j>er head, or $'_".?,74'J, making a total reveuuo from laxos upon slaves and free persons of color of $5110.77.1 .?ii or nearly uiitu-teuihs of the entire amount necessary to carry on the govormneiit. The practical working of this system was ihe fostering and building up of a huge and pow erful landed aristocracy ; a man's title to rank and social position depended Upon his princely acres. The greatest boast of tho South Caro lina gentleman was his inheritance of fast landed possessions, tho hunting grounds of his fathers, the pride of his children. The comptroller-general, in his roport to tho General Assembly for 1860. I tn led that "the tax on all the land of the State, amounting to 11,553,401 acres, produced only $82,515.51, which is less than an avcrago of tlvo cents per acre I" Vnluablo cotton lands which tho owners Would not have sold for hundreds of dollars an acre, wero valued for tlu purposes of taxa tion at Ovo cents per acre. Now, human slavery is nholishQd. Millions of capital invested iu human chattels have been swept out of oxistenco with a singlo stroke of tho pen. Some other species of property niuct lear the expenses of tho gov ernment in it* ste.id. Winch i3 it? The ex perience of the civiiixed world answers that tho trno basis of taxation is real and personal estate, and tho new regime in conformity to thai experience has ndoplod that system for tho now order of things. The practical operation of this now and equitable system in South Carolina is the sumo as thatoxperiencod in tho North n half coiduty i ago. The taxes fall chiefly, where they be long?upon ro il estate. The owner of re.il ostate cannot a lib; d to keep thousands if acres idle and unproductive merely to gratify los personal vanity, and belausche inherited tin from his fathers and pay the tax upon theni. Stern necessity, therefore, will compel him to cut up his ancestral possessions into stnnll furms, aud sell to lliopo who can and tpjlt make them productive; und t)it!<? tho masses of the people will liecome property holders; wealth will be more widely diffused : Hie peo ple wdl become mote prosperous; immigrants will come and settle amongst us and develop the vut-t recount's of UiO State. Thus on ward the inarch of civilization makes its vay, ami no cry by the large real estate owner of excessive taxation can stay its progicss. lint aside from this view of the question there is another which I will now present. i That the uij'jrnjatt amount received from taxa tion since lsGO has greatly increased, is a fact I which none w ill deny ; but this is also ti ie of tho rational government, and .of every Statu ol the Uniou. The question is not whether taxation has or has not increased, but. whether ' tho comparative rate of increase is greater iu this than other States of the Union. The following table will show the increase of taxation between the years 1860 aud 1370, iu five Democratic Slates, as shown by the ninth census : Slate*. Agcroirnte, Taxation, Ineretae In Arm?? Istin. WO. to rears, an. leer's. Go.**!*, I TyT.s?? i.;.C-J7,089 tri 87 W ?-10 f. Min-v, 1,11*3,711(1 S,!tsi,ATe IM SOG-lil M .iv I.e..'. 8.l5S,si?5 tIS8?.9rt0 8 80 82 Kentucky, 2 14s. 8 41 6.73n.lls It* l?i fi -M Miasourt, 4.10*6.'? 1S.tn.is.4VS 8.14 81 4-!0 (Jritural average annual lucres*-, 80 S-10. IsSU. 1&70. B. Carolina, Sl.vrsO.Ss? ? .?,767,675 fl.lG 11 C-10 Thus it is seen that whilo tliesvorsge an nual increase of taxation in those five States has been 20 0-10 per cent, in South Carolina it has boon only 11 0-10 per cent. The aggregate taxation of the national gov ernment has increased from $9l,lSo.7lO, in 1860 to $280,591,831 In 1870, or an average aunual incrosse of 10 4-5 per cent. The following table will exhibit tho per capita taxation in several of the Suites, (as shown by tho ninth census.) and by this table, also. South Carolina gains by the com parison. Stales. Pops- AgtwgAte Per Utfun. t*x4tli.n. capita. Massachusetts, 1.457.451 834^8,000 ?IC.S4 New York, 4.ss-.? 7.'i? 4K..V UMS 11.09 Ohl-?, 3.C0.V0.? 28,f/2?.54S fc.75 Mnrvlsnri, 7s?.!*J4 O.UH8.S49 ft 41? Kentucky, l.ar.oii G^njis .isa ?eulh Carolina, TO5,6CS 8,107X73 aSS The per coj>i(a taxation of the United Slates, according lo the ninth ccn.?iis. is $7.27. Tho State of Nevada with a per capita taxa tion of $10.40. and the State of Florida with a ;*r capita taxation of $'2.64, probably re present the extreme and lnenn of tho j?r capita taxation of ihn different States. Tho average per capita luxation of the thirty-seven Slates comprising the American Union is $7.'27, or $3.80 moro than that of South Carolina. . Tho foregoing illustrations prove conclu sively thai the rate of taxation in Ibis State is not excessive, and that the increase aineo 18'iOhnsnot l>een greater than that of the United States or tho several Stotes. It will lie noticed from tho foregoing tables that the State of Massaehusotla, unquestion ably tho best goi'emsd State of the Union, is, with one exeeptinc, the highest taxed of any State of the Union ; and. notwithstanding tho magnitude of taxation, <'io aggregate receipts have not b?on sufficient to prevent an nunusl incresso tf the public debt. cotfoiufttow. Senstors and Representatives! permit meto express the hope that, while differences of opinion, incident to Uie right of froo discus sion timortg inderendent and untrammelled Legislators, will be assorted In your respec tive Houses as to the grave questions pre sented for your con j.'ler.dion, your delibera tions may be mnrkeri by an t uriwrt and undi vided purpose 10 advance the common inter est of the people and the truo welfare of the Stato. And to these ends I sincerely invoke upor. all your counsels the benign guidance of. jun Omniscient Providence. Fit vNKt.is; ,T. Mosks, JsV, , _^^^j^m^c.,1" pf South Carolins.