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? - .i^u^tattcio^iifn Tuxiq?, -that suoh delay will bo V ^incurred as will raako the ^cwuionlatcd debt $*&t^rif^^ to i^'N'tvoq?U ?}K -that' nqn Action will, loud to .'tiiial ?SH*WWM:V*f'" earnestly hope that this will ' rio^be' the case, bul l feel it my duty to.sug" t.??.!''u^ii'ttie^d?n^r.r;ItV?uld,W host for all par -'^v wW,to. i?ok.tho difficulties squarely in the face, ; j'and make a full and Hunt* settlement, by con vertltig nil tho outstanding issues into n con? solidated debt, upon which the interest would bo paid without failure. In my opinion the '. creditors' would .be willing to accept such en isauo In Batisfuctlon ol their, chums, pruvidud ;i: too'grtsat a loss ?hb?ld not be iu?leted upon " thoni; and certainly, .ih yieWof the constitu? tional, obligations, as' well as regards tho .vi'- honor and good name and tho material ' intorosts of iho State, tho General.Assembly ;aho>ld meet'them half vs'ily." * * * * * ?>';!3|fl**:i?j!eh7flM?f adjustment ahull be made, it ?' tWU nouuubt bo (supported by .the good men ? of all parties,' and will be acquiesced in by theipeoplo." . ??:; ;iVl T?L4kK'1.0|,; ADJUSTMENT. It is fl well.oatablishcd principle of political: economy that an individual having money to .; - intest; will make an <lnvestment in -that class of "8eoarit'i88" which ofJEgrp iho best guarantee of 8ufoty~securitiua wfHm will not only pay a premium upon tlio.mouey'invoKied, but which ? may bo disposed of, without loss, whenever a ..' . chango of investment is desired?in other viot>\* r. markdobte security. Tim valuo of it. Stato Bocurity depends iargeiy upon the ecaSdunse of the purchaser i\.7in the good ;faith of tho State, but moro oapociully upon tho means which tho State t; places tit tho hands of every holdor of her bonds, to-'com pel'the punctual payment, of . the interest as It accrues, and tho principal at maturity. Tho Stato is sovereign and cannot \ be^suedl blit.vylien she enters into a contract with nu Individ?al, through her agents, and :'- directs said ?agents to porfbrm certain duties iu fulfillment of. that contract, such Individual - - can compel'the agents of the State lo execute ;thoT' \yill pf ? the: State as oxprosscd in such t contract. -Thus, inthroo-fourt h h of tho Slates, when '? ? ever the JhiuRcIal officers'" are authorized to . croato dobts by tho issue of State obligations, .'?,? the'mechmory.' for the 'punctual payment of tho intorest und principal is provided as a part/.Of' the- contract.;, and overy Individual . Who ncpopts such obligations in exchange for the 'tuonay.fr lie; advauces, recei vos a remedy? of which the obligations thorn solve:; arc the i ovldehce-^for every neglect of duty iu tho premises On tho part of .tho agents of tho , Stato. "Such on-obligation offers tho best . invosttuunt that could possibly be made, inns much fls tho holder thereof has a lieu upon thoV entire property of the Citizens ot tho . "State. ' ? ?? ! ? 'Hciw: 14: it wiih: the hondod debt of this Stn*> r j ' '- ? . Our dobt may be dividod into three classes. The first class ittcludos all thoso bonds, (ori? ginally issued,) of the live classes enumeral . .'. ed iu tho decision of iho Supreme Court upon the Morton; Bliss and Company maudamus case,: amounting to $3,549,000. Tho second class includes nil thoso bonds and stocks, .whoso.only guarantee for the pnyi moot of principal and intercut is the good faith of tho State. ThU class comprises thu old bonds and stocks, (except Blue Ridge bonds.) tho bonds for funding past-duo interest and principal, ami funding bills Bunk of the Suite, und amounts to $4,513,503.35. The third class uro thoso for which n^-pio vision has been made for the payment of interest or principal by guaruntse or otherwise, and includes tho Blue Ridge bonds, (tho lib soiieo ?>r the guarantee in this instance being . - .nrOuahly. au, ojcurai?lit,).uniL ?the ^ny.y^lon bonds issued directly by side or hypothecation. This class aggregates $0,905,000. ' This concludes the his ory of tlie character ?f dur bonds. Let us now enquire thoir pres? ent'market value:: ;,;Our "January und July bonds," old aud row.'which comprise tho entire amount, ox cept $2,189;el'0cf " Aprils nnd Octobers," ore quoted at! Hfteeii cents. Thu laller, being a portion of thosb recently before the courts, are quoted at twenty-three cents. Now it is evident, from tho arguments pre? viously advanced, that tho Slide is unable in pay the iuterovt upon tho debt as it Bfinds, and that it'is to tho interest of every bond holdor that tho debt be reduced in volume to a' reasonable limit, so that tho payment of interest may be resumed. If, wheu tlie hold? ers of our bonds und stocks agree to surrender client for o new uud consolidated bund or stock, tho Stato agrees as a part of Iho contract (of which such boud or Block itsotf Would bo t|io evidence) to provido for tho payment of the annually accruing interest und for tho extinguishment annually of a por? tion of tiiu principal until tlie whole shall be thus redeemed; if, In pursuance of such agree? ment, ahn instructs her agents (whoever may represent her I'toui tho ditto of tho contract until the dobt is entirely extinguished) to levy ' and collect annually taxes sufllcicnt to pay said interest and retire a portion of the said principal?If silo instructs her ugouts ns aforesaid to disburse the funds so collected to thu purposes aforesaid, and if onibezzlomout or diversion'ot said funds bo mado a felony, pun inhiiblo tos tho constitution directs, it is evident that it would be to the best interest of the bondholder to accept willingly such a compro? mise. For if these remedies bo placed iu the hands of every bondholder it is evident that While'litS new bOUd WOUld represent upon its face a sum equal only to two-thirds or one-half the face value of his old bond, the market value'of tho new bond would undoubtedly bo from one-third to one-half greater than the present value of the old. For instance, if $3,000 of old bonds worth . 15 cehts on thu dollar, or $450, be exchanged for $2,000 in now bonds worth at least 40 ceflta on tho dollar, or $800, tho holder will -have made a clear gain upon tho actual value of his bond of $3&0; aud again, If $3,000 in old bonds worth 23 cents on tho dollar, or $889, by'exehnnjwl for $2,000 in new bonds worth at (cost 40 cents on the dollar, or $800, the Holder will have imidu a clear gain * upon the actual vulne of his bond of $110 ; and. In addition thereto, tho payment of iho interest and redemption of the principal of his new bond will be amply secured by remedies In his immediate possession. Before proceeding to discuss the details of this plan of adjustment, it may bo useful lo examine tho history uf tho different States, and enquire who.her they or any of them wnro hot at somo period burdened with debt even r.s South Carolina is to-day; thu method adopted lo relievo themselves of that in? debtedness, and the practical operation of such method. Tho State of Indiana failed to pay tho in? terest upon' hor public debt from 1H-I1 to 1847, during which time she acquired n re? putation for bankruptcy and repudiation, from wlilch she only recovered after yours of deter mm'orl effort and Iho faithful discharge of her obligation's. Idko most of tho Western Stales at that time gigantic schomcs of intennl im? provement, schemes for subscribing millions of State'bonds to build canals and railroads for the development of tho great West, wen? rushed through tho Legislature without thu alighted consideration of their feasibility. And in Indiana, as In most of her sister States, these bonidfi wore hypothecated and sold for a niero song. The Utopian schemes .of developing the resources of tho Stato vanished, into thin nir, and the railroads and canals could be found only iu tho buncombe speeches of their advocates. r (it ItUO tho peoplo reallxod their (rub eon dilion, but u?it before thoy hlid boon burdouod with a dobt of $14,000,000, besides, the in lorvst which hud been accumulating lor .-ix years. The Statu theu nmdo a compromise with her bondholders, in which shVugreed to transfer her title- to tho Wabash 'end Erio Canal in liquidation of ouc-hnlf of h?r debt und to issue eertiUcutes or stock, beuriug five por cent, interest after 1854, for the other hull*. Tho Legislature solemnly pledged tho faith and funds of tho State for the punctual pay? ment of the interest aud principal; and afterwards solemnly set apart nil tho revenues of the Stato dorivod trom taxation for general Slato purposes, after tho defraying of tho ordinary jptpehsos of tho government, to tho pnymenttflpf the interest und liquidation of the principal of tho debt. This compromise aud contract was afterwards continued by tho people ut tho ratification of tho ''New Con? stitution of 1850." Even tho old creditors of tho Stato who woro not directly interested in these schemes, aud held none of these questionable bonds camo forward wittingly to relieve the Sbito of tho ibid stain of repudiation, nnd made sacrifices of their pecuniary interests which mado tho compromise possible. Aud now, by tho faithful pcrfoimancc of tho terms of this compromise, her credit has been completely restored, nnd stands upon a perfectly secure basis; aud without oppres? sive taxation her dobt is boiug very rapidly extinguished. The history of tho finances of tho Stute of Michigan furnishes another illustration of u compromise effected between a State and her creditors. Tho compromise nmdo by tho Sbito of Indiana was nitulo at tho suggestion of the bondholders nnd with their hourly assent and co-operation; that of the State of Michigan was mado without agreement, which the bondholder was obliged to accept or get nothing. Her llnnneiul troubles began in 1840. Tho fever for issuing bonds to build railroads und canals raged at that time as an epidemic throughout the entiru West. Liko a prairie lire or u swarm of the drvuded caterpillar passing over a cotton [danration in the South, its uppeuruueo wus us sudden, its mutch us rapid, its desolation us complete. In 18.17 and 1838 Michigan issued $5,200, 000 to build canals and rnilroads. Tho Gov? ernor mado arrangements with U banking company to uct ns the agents of tho State in tho negotiation of the bonds. The company negotiated n portion of them and made tho proper returns to the Stato; tho moneys woro payable in installments. Tho State was emi? tted to receive about $2.857,0:10.70 on tho remainder of bonds in bauds of the company, when suddenly it collapsed, nnd it was dis? covered that the whole amount of bonds had boon hypothecated or sold, had passed into the hauda, of innocent partitB, and word out? standing ns a charge against tho State. The Governor publicly culled upon tho hokinrs of the hotids either to pay tho balance duo uOjfm them by- the company or surrender them'$jjni have the .amount thoy paid for them refunded. The Legislature of 1841 continued tho action of the (Jo vom or aud again demanded tho sur? render cf tho bonds upon tho terms before mentioned. A portion of tho enltro sum of $0,200,000, amounting to $1,387.000, were 'nut included in tho demand for the reason previously given. The bondholders refused to accept tho com? promise and no further action was taken until 1840. At that time (March, 1840.) tho Stato sold her railroads and received us part pay some of these part-paid bonds, scaling ' tho principal at the rate of $400.88 por $1.000 in bonds, and the interest nt tho rate of six per cent on $302.*I3 (breach $1,000 of said bonds. 1 In INDii, tho Legislature directed iho trea? surer to notify the holders of said bonds, by public advertisement, to surrender their bonds within six months, as after that limo no in ter;st would tie paid. The six months expired August, 1855, mid from that time tho bonds have been adjusted ut tho rate of $578.57 for ouch $1,00(1. Thero are still outstanding $54,000, adjustable nt $31,242.78. Under tho operation of wise legislation, ample provision having been made for the I payment of the interest und extinguishment of the principal, by solemnly sotting apart u portion of tho annual revenue and the levying I of a specific annual tax for that purpose.?tho I credit of tho State has been completely re? stored ; the resources of tho Stato uro largo I and annually increasing, while the debt is small, taxation light, a lid no occasion to make I it oppressive. Tho uuditor-guueriil in his re? port of Buptemhor, 1871, states that the sink I ing fund was huge enough lo furnish tho means of redeeming all the bonds outstanding before their maturity, if the holders could bo induced to . nder them, ami the Governor, therefore, re ?ids the re | teal of the act levying u s; tic t..x for tout purpose. The bist?. , of tho llnnnces of the Statt of Illinois is worthy of especial notice in this connection, us in several respects sho passed I through a similar experience to our own. The success which rewarded that band of put riots who combined to resloro tho credit of the Stute, und to lift the cloud of suspicion of re? pudiation which rested heavily upon her, might well furnish a lesson to the citizens of I this Slate who have her best interest nt heart. The financial troubles of Illinois occurred prior to the adoption of the constitution of 1848; She hud neglected for u long limo to ! pay the interest upon hor debt until tho prin? cipal and its interest accumulations amounted to tho enormous sum (so considered nt that time,) ol" $18,000,000. Party leaders im? peached the validity of tho debt, and recom? mended that the people refuse lo provide for its payment, while the tax payers relieved I from taxation lor one purpose, vigorously op? posed paying any taxos it nil. The distress? ing condition of tho linances is fitly portrayed in the report of the auditor of tho State of I December, IS70. Said ho : "To Umso who can remember the condition of the State of Illinois in 1847, the treasury empty, the Gov? ernor borrowing money upon his own credit to pay tho postage on tho letters written on tho business of the State, her bankruptcy known mid sneered at all over the world, even her honesty of purpose doubled, und some of her own sons trying to bring her to the infamy of repudiation; the simple state? ment of these facts requires no comment In make them impressive. Who can not see that at least in tho case of .Stales und nations honesty is the best policy." The legislature by act of February, 1 ft 17, authorized the refunding of I he Stale debt : the preamble of snid uct is quoted hem, as il shows iu a mil-shell the exact condition of the debt. Whereas tho State of Illinois basal vari? ous times issued u huge amount of internal improvement bonds of various classes, yet hearing the same numbers, nod having inter? est coupons thereto attached .similar in num? ber und description, thereby causing great confusion and opening a wide door lor fraud, and rendering il extremely dillieidt lo pay the interest lo those justly entitled thereto; und whereas, also, from a want of a full ami per? fect record of the classes, numbers, and de? scription of tho bonds so issued, il is impossi? ble III I he present time lo determine Iho pre? cise ntltotlllt of the indebtedness of the Slate, iis character, and when payable; and whereas, it is of I he highest import.nice Hint the actual amount nnd character of the present Slato debt should ho accurately iisccltallied at the earliest possible period, preparatory lo u more united und vigorous exertion for its payment, und to enable the Convention for altering tho constitution (ubout to assemble) to make some I adequate constitutional provision for tho pay? ment of thu principal when duo, ?io ueeriiiiig imeiostnnd ?Jiu intercut in urreur; thorolorV.'V. ?UnriorV.ihls act wo on'-iro debt was futjd cd,, except certain bonds and acrip known us ? tho'.' fcracnlutor ami Stobbins bonds nnd scrip, canal, bonds, and oilier evidoncoa of indebtedness of tho Illinois und Michigan cannl. New internal improvement scrip was issued for tho old dobt, equal in amount and bearing liko interest and payable at tho same limo ns tho bond or scrip surrendered. Tho ''Mucalistor und Stobbins bonds nnd pcrip" amounted to $013,2)0.44. They Game, into the possession of said llrm us the agents of the State. The State received, for said amount $201,500.33, or about 28 04-100 cents, whereas they wero entitled to receivo accord? ing to n groom cut. about 40 cents on the dollar. The firm refused to pay the bulunco, and tho Legislature in February, 1849, In? structed tlte Governor to compromise tho mutter by ptfering to fund tho amount actually advanced upon the bonds with 7 por cent, interest, from the dato of the advance to the time of funding; and notwithstanding thi/se bonds had passed into tho hands of innocent bidders, tlte Slate refused lo recog? nize any further liability noon them, except to iho amount of 20 cents ou tho dollur with 7 per cunt, interest. This arrangement was acquiesced iu by many of the holder* aud must of iho bonds havo been funded at said rule. Tho constitutional convention of 1848 submitted tc tho peoplo the following amend? ment, which was ralilled by a large majority of votes: "There shall lie annually assessed and col? lected, in tho same manner as other Statu revolt no may he assessed nnd collected, a tax .of two mills upon each dollar's worth of taxable property, iu addition to all other taxes, lo bu applied ns follows, to wit: Tho fund so created shall he kept separate, and annually Oil tho first of January, be appor? tioned und paid over joo rata, upon nil such State indebtedness other than the canal and school indebtedness, ns may for that purpose ho presented by the holders of tho same, to bo otfiorcd ns credits upon und to that extent iu extinguishment of said indebtedness." The first tux under this provision Wim col? lected In-1849-50; iho credit of the Statu immediately revived, and iu 1852 tho State entered upou no era of prosperity unprece? dented iu the history of any other State of tho Union. This feature of tho constitution oporalod beneficially to tho tax pavers in a manner entirely unforeseen. As tho State grew in wealth tho Iwo mills tax. iho collection of which was imperative, begun lo realize u larger sum than tho Stato could annually apply to the extinguishment of tho debt, us the holders refused to surrender so vnluablu n security until compelled to do so by its ma? turity. It became necessary, therefore, in order to avoid the collection of an amount of tuotioy under this tax in excess of what could bo actually applied yearly to the extinguish? ment of tho debt, to reduce the valuation of property as low us possible. Tho State audi? tor, iu his report lor 1S00, estirnutcd the taxa? ble property of the Stale lo ho assessed at twenty-tlvo per cent, or one-fourth of its actual value. The last levy under this provision of the constitution of 1848 wus made in 1870. Tho moneys now on hand, together with ihe rev? enue from the Illinois Central Railroad, will be more than sufficient to cancel tho entire indebtedness ut maturity, which amounted on Iho :t 1st day of December, 1872, lo $2,0C0, ioo.o:t. Tho foregoing illustrations are sufficient to show thu manner in which several of the Slates got imp debt, the means ihey used lo extricate themselves, und with what success. Thu lossou they tench is too plain to require comment. . .Having looked at Ihat picture, lot ns ex? amine this : Tho State of Minnesota, in 1859, authorized Iho issue of $5,000,000 of bonds iu aid of cor lain railroad enterprises. The roads wore not built, but the bonds were disposed of. Tho Sluio rufuscd lo recognize tho validity of tho debt or provide for the payment of interest or principal. They, have been practically ru 1 pudi.-ited for fourteen years. The bondholders have mado repeated efforts lo effect a compromise, but each and ovory effort bus been unsuccessful. Tho present treasurer, however, stales that ho desires the mutter lo bo settled und is en? quiring us to the best method of adjustment. From tho report of the committee on fin? ance of the constitutional Convention of 1808, of lliu fitatf. of Arkansas, it appears that suid State hud virtually repudiated her debt lor thirty years. In reply to Iho question '? What is the presmt value of our Stute bonds," tho committee reported " That tho bonds of the Stale of Arkansas uro not quoted iu the market ol any city of thu c/tfi lizeil toorht. This is attributable to tho luct that in n period of nearly thiitij yeart, tho Slato authorities huvo not provided for the payment of interest on her bonds. A system of financiering known only to thieves und robbers without conscience prevailed to such an extent that their operations now cost the Stato the neat little sum of $5,104,004.10. Not content with impoverishing the State,- desolating the country,aud causing mourning at every hearth? stone, wo find Iheso self-same men nrrayed in hostility to thu present reconstruction mensiiros, hoping thereby to hide from the public guzo and investigation, the plunder and thefts of thirty years I * * * * For years the levy of the Slate lax wus light, thu people thought tho government was .well and economically managed, by letting the bonds run for years without paying any in? terest, und not seeing any appropriations for I he payment of intoichl ou those bonds in thu disbursement of the public funds, it is not strange thai they forgot thu indebt? edness of a prliir generation." It is proper to add that the State authorities referred to, who were responsible for that debt, belonged lo the Democratic party. The reconstructed government has recently nmdo provision for the binding of Ibe debt, hoping thereby to restore iho credit of tho State. The Slate of Virginia bus not paid all thu annually accruing inlet est of her debt lor years, nnd it is only recently tlmt the public have been made aware thai the volume of debt has been largely augmented by the lie orueil interest. Virginia has been under u Democratic administration lor yours, und, like Mm laws which control the animal and vege? table kingdom, the nearer Ihe debt approaches maturity the larger it grows. It is strange indeed that I hose who ereilte'! ami controlled iho debt, ami who still hold iho reins of government, have mado such in? adequate provision for Ibe payment, both ol interest, mid principal. The debt of Virgil.iu is reported lo be, in round numbers, $47,000,000. Tho Legislature, session 1871?72, provided for Iho payment of 2 per centum of iuluiOst upon bonds enitiled to 0 per contain of in? terest, and 1 ? per centum of interest upon bonds ou tilled lo ft per eentiim. 'Ibis is Ihu best lliey have dollO iu defense ol* the finan? cial honor of the State. SiiUieient bus been written "lo point n moral." I.et us now return from Ihu study of Ihe conduct and management of thu debts of other Suites to the point whonco wo started, viz: the adjustment of our own debt. Governor Orr, iu his uillllisl message lo thu legislature, (seo?lon of 1800), made thu follow, iug recommendations iu regard 10 tlio public debt: , I;""V t *8 ': ?. " It \iic, liowovor^ emifictttly, proper that 6UIDU iluoucial schei?? sifould^bo now adopted Jto prepare tho Stato io njpetUho principal of tire debt as it falls due. If- tho interest is regularly paid on the debt, $100,000 nnmtally Bet apart as a siukiug fund for twouty vears, invested in safe securities yielding six per cent, per annum, the principal being further increased by tho iuvcsluioul of tho interest annually accruing, will accumulate tho sum of $3,899,312, which will be Hourly adequate to tho payment, cf the entire debt then dun; and r reconnnond . that proper legislation bo adopted at tho present session to inaugurate this scheme. "Under tho act of September, 18GC, provi? sion' was mado to fund the interest on stock issued under the authority of tho act of 1803. to continue tho construction of tho new State Houso; the whole amount issued was $24,820. Tho issue was uot made until somo timo during tho year 1804, when there was a heavy depreciation of tho curroney aud when labor and material wore in a cor? responding degree appreciated; $400,000 were issued iu 1802 under authority of the act or 1801, when labor and material had appreciated very liltlu. In my proclamation I excepted thesu iwo issues from immodiutu funding until the General Assembly met ami determined whuthur these stocks should bo scaled to tho real value received by tho Stato for thorn wheu issued. Tho convention adopted u rule for thu government of trans? actions between individuals during this time, which was just and honest, and no reason is perceived why tho same rule should not be appliod iu transactions between the Statu and its creditors." From the above, it appears that Govornor Orr acknowledged that uo provisions had been made lur the payment of tho principal of tho public debt, and realized tho necessity for, and wisdom of, making immediate pro? visions therefor. lio also conceived it tu bo just and proper to scale a jtortion of the public debt, and took tho responsibility upon himself to exclude them from tho benefits of tho funding nets, until the Legislature might meet und laku action thereon. While it ia true that tho Legislature dis? regarded his recommendations, every one will admit their soundness. They are quoted hero for tho purpose of showing that a precedent bus been established for tho recommuudulious which lotlow. I recommend: First. That all the bonds of tho Stato Tor which thu State is actually liable, less $38,000 State capital bonds of 1863 past due, to bu otherwise provided for, be scaled in tho fol? lowing manner, to wit: That tho Stato treasurer bo authorized, and I instructed to receive from tho holders trilling to surrender tho same all the bonds nnd stocks of tho Stato previously issued and now outstanding against -the State, (uot including tho Stato capital bonds before referred to, and bonds known as " Conversion bonds " issued directly by sale or hypothecation, thu numbers and denomination -of which will more fully appear by reference to the treasurer's registry of bonds nnd stocks converted, or issued directly, amounting to $6,905,000.) and shall thereupon in exchange for and in hou uf said bonds or slocks so surrendered, issuo lo said holders other bonds or' 'certificates of slock, as they may desire, equal in amount to r* tho faco valuo of the bonds or slocks so surrendered. That the State treasurer la? authorized and instructed lo receive from the holdors willing lo surrender tho same, all tho bonds of iho Stute, known as *' Conversion bonds," issued directly by sole or hypniheonlfon, Ihu number und denomination of which will fully appear by rcforenco to tho trcssut ? registry of bonds aud stock converted, aim issued direct? ly, and shall thereupon iu exchange for aud in lieu of such bonds so surrendered, isHiio to said holdors bonds or certificates of stock equal in amount to-or tho faco value of tho bonds so surrendered, und uo liability on tho purl of the .Statu is recognized lurthor than is herein limited and expressed. That iho State treasurer bu authorized ami instructed to receive from iho holders williug to surrender tho same, nil the coupons upon tho bonds before ' montionoJ, which have ac? crued or will accrue on ihu 3Islo| October, 1873, and iho interest orders upun interest due upon cortilicatOB of slock ss aforosuid lo thu dale aforesaid, aud ahull, thereupon, in exchange for nnd iu lieu of such coupons or interest orders so surrendered, issue to said holden bonds or certificates of stock eoual in amount to-of thu face valuo of thu coupons or interest orders so sur? rendered as follows: Coupons and interest orders of the principal of bonds and stocks scaled--at-to be aenlod in tho same proportion, and coupons and interest orders of tho principal of bonds scaled at -to be sealed iu thu snmo proportion. That the Stnto treasurer bo instructed to receive from iho holders willing lo surrender the same all tho pay certificates, bills payable, scrip, or other evidence of Slale indebtedness outstanding against tho Stale ou the 31st of October, 1873?except appropriations payable as dulicinncies?and shall thereupon, in ex? change for and iu lieu thereof, issue to said holdors bonds or certificates of stock equal in amount to-of the faco valuo of tlie pay certificates, bills payable, scrip, or other evi denco of Stato indebtedness so surrendered : Provided that uo liability to pay the aforesaid pay Cortilicatoa, bills payable, nnd scrip or other evidence of Slato indebtedness is recog? nized other than is herein limited and ex? pressed Second. Tho bonds and certificates of stock herein authorised tobe issued shall bear upon their face iho words ''bonds and certificates of stock." nnd shall also bear upon their faco a declaration lo tho effect that tho payment of the interest is secured by tho levy of an annual lax, and the redemption ol Iho princi? pal is likewise secured by a sinking fund pro? vided for the purpose, which declaration shall I bo considered a contract entered into between the Stato nnd every hohler of such bond or stock. Said bonds and slocks shall bo signed by tho-, countersigned by the and havo thu great seal of tho Slate affixed thereto, and there shall be preserved iu lhe offices of the secretary of Stato and Stalo treasurer, u description of the amounts, dai. *, and lime of issuing said bonds, and llic bonds und scrip so taken up shall be cancelled by the treasurer, and a list of (heir dales, numbers and amounts, and by whom signed recorded ia the olliecs of the State trea? surer und secretary of Slate. Third. That tho faith, credit and funds of the Slate bu solemnly pledged for tho punc? tual payment of the interest, ami lltiul re? demption of tho principal of said bonds anil slocks, nnd for providing a sinking fund for that purpose. Fourth. That there shall bu annually levied and collected, from until the bonds and slocks herein authorized are extinguished, principal und interest, ill tho same manner and at the same time the gene? ral Slate taxes am levied and collected, u tux of-mills upon the dollar of onch hun? dred dollar's worth of taxable property in tin.' Stato. in addition to all other taxes. That Ihu fund so created' shall lie kept separate from nil other funds and shall bo applied: First, to tho pnymeut of the uuniially accruing interest upon tho bonds and stocks herein authorized. Second, tlio surplus of sold fund* romulu lug in tho treasury aftor ihe payment of tho sc id interest aliidl be applied ou or boforo tho .'.??? of ouch year to the extinguish uieut of tho principal of the public dobt, as folio wb : "? Tho-, .., -,-nud -I-??, Khull couatituto a board of coturuih aiouora lor tho inaungemoiit aud control of tho said surplus fuud for the extinguishment of the public dobt. The said board ahull givo notico by public advertisement for thirty days prior lo the ? of - of eaoh year, that thoy have undor their coutrol tho aum of -dollars to be applied to tho purchase of such bonds or stocks as may bo presented lor payment, by the holders llioroof, on thu-of-, as aforesaid; provided, that said bonds bo nur* chased at a price not abovo their market value at the time of purchase, said value to be oscor tniuod from the principal stock markets of the United States. Third, that tho ltouds and stocks so re? deemed shall be immediately cancelled by tho treasurer iu the prvauuee ol* tho board, and bo colored us credits upon aud to that extent iu extinguishment of the public debt. That a detailed stntement of tho number, denomi? nation and series of the bonds and stocks so redoouiod and cancelled, together with thu price paid for euch bond aud stock, us afore? said, shall be prepared by the trenailror, signed by Iho board and furnished to tho General A 'enibly at thu commencement of each animal session thereof. That embezzlement or diversion of said funds, whether directly or indirectly by speculating in said bonds, or purchasing them at tlctitioua prices, bo made a felony punish? able by a tlno of not more than-nor loss Table Showing Ihe Pi obable Oper Fx Unguis PKltlob. Secuml., TIMK 5 i 3ir>o,uoo t70,oan 180,000 Ootubxr 31, 1S74.1 187.-.. ls7<?. IB7. " l?7l. " 1879. " 18kii. 1881. " 1881 . ? I8a:i. Third.j " 1M4J. " 188S. " 188T. . 1887.! " lsSS.I " 1K8U.I 200,01 U " 1 *' ISSO. M ! ? 1891. " " 180-2. " j '? 180.1.1 Cash on band October 31, ISttl, 9:11.709.00. This Uiblo, na has been scon, has boon bused upon your reduction of thu public debt by n sealing process, to a maximum of even the largo amount of $l'J,000,uU0, which amount I hnvo selected simply lor the pur pose uf illustration. taxation. Taxation is dulluud ua tho* taking of private property for public use. Thu cxeicisu of this power is always regarded by the individual with a jealous wye: aud is n subject of oapocial interest. It affects in its operation ?very Individual who forma a component part of the body politic, whether ho be the ownor of property or not. The discussion of tho various systems and the best methods of taxation, engrosses the attention of the states? men of thu civilized world. Whether iu ''proud JJritain, restive France, imperial Russia or feverish Italy," il is ul the present moment a question of all absorbing interest. Taxation, iu sume form, is as uucicnl iu origin uu suciuty itself. No civilized com? munity can uxist without taxation, and no high degree of civilization is attainable with? out comparative large Urxotion. The principlo, laid down by Adam Smith, which has been ougrafted upun the funda? mental laws uf evury civilizod country, ''that tho subjects of every Stato ought to contri? bute towards the support of tho government ns nearly as possible iu proportion lo the revenue they respectively enjoy under tho protection of thu Slato" is u truism uuivur sally accepted. That system of taxation, therefore, is most just nud equitable, Mlid least opprosdivo, which-it ho framed as to carry this proposition into actual operation. Tho constitution or this Stale evidences tho intention ol its Cramers lo illustrate this prin? ciple in that section which provide* for a uniYorm mid aural i rale uf assessment ami taxation, aud which declares that all property, real, personal or possessory, shall bo subject &> faxuiion. This system of taxation succeeded tho sys? tem, or rather lack of system, of the feudal agon, when all property was hold as tlefs of the crown. The crown was maintained by the crown ostates. The lorda, or the original sovereign* under the crown, exacted tribute from their serfs. In time of war each lord was expected to furnish his quota of troops and boar his share ol tho expense. Justice was Administered by tho lords proprietors, and the measure of justice moted nut was regulated by iho ability of the person so de? siring to pay for it. Among tho Hebrews, during the lime of Solomon, laxea were levied upon houses and transit taxes and tariffs 011 tho introduction of foreign merchandise. So oppressive was the system of taxation then that it caused tho Moriing to death of Adoram, who wus "over j the tribute" and the secession of the ten tribes. In tho Athenian republic no diiccl taxes were levied upon real or personal estate, bill revenue, was derived from the sale of public laud, fines and confiscations, nud n capitation 1 lax upon frcetlmcn and foreigners, duties upon foreign commodities ami merchandise. In Rome, under (ho republic, ihe a|Kiiln of conquered nations and (he annual tribute re? quired of ihom, paid tho expenses of the gov crnmciit, hut undor the empire portions of the revenue woro BPquosirated, capitation luxen loviod, laxos on corn and heavy sums exacted for the privilege uf Roman citizenship. In France, prior to tho revolution of 1708, ihe nobility and clergy were exempt from lux? ation, and tho burden rested heavily ami with crushing weight upon tho poor. Resort was often bad to forced loans, salu of monopolies, aud oven coiillsi alions, to men: tin; extrava? gant expenses of Iho monarch. To return from this digression us to the va? rious methods of taxation of force at different periods of tho history of the world, tho sys? tem of taxation which now prevails is pre? eminently superior iu thnt iho burden is equal? ized, each individual contributing hi:, share of the expense of iho State iu proportion to the protection of lifo and property hu enjoys un? der tho iawa of Ilm Stato. Il will bo admitted by nil that luxation is u mfe.iiary expense; il is also u desirable ox jieuao. " It can probably bo demonstrated," it bus boon said, " thai there is no one act which can be performed by a community, which brings in so lurgo a return to thu credit of civilization aud general happiness, us the jil sgSSSZ SSESSSSSSSSSSSSSSSS 3 ' 11 ' than-, nnd imprisonment Tor cot moro ?thau ?- or loss than -, proportion ate to tho amount ombezzlctl or divorted; and tins person or persons ho offending ahali he forever, thereafter, disqualified from hold? ing auy office of profit or trust under the constitution unless the General Assembly shall by a two-thirds vot? relievo him or them of such disability, upon payment into the treasury of the amount so embezzled or divorted. It will bo observed that the plan I havo pro? posed for tho extinguishment of the public debt differs materially from the one proposed by Governor Orr. Thu sehemu hero present- ' ed is in successful operation in the beat gov? erned Status of the Union. Experience has demonstrated that a sinking fund operating at compound interest is not only liable to great abuse, but very seldom, if ever, accomplishes the object ol* it* projectors. Iu the words ol' Dr. Hamilton, of Aberdeen, '?thu increase of revenue or tho d.munition of expense arc thu oiiijb means by which the sinking loud can bil^Bnliirgod and its opera? tions rundered moru ??d'ecninl: und all tho schemes for discharging the national debt by sinking funds, operating at compound interest or iu any other manner, unless so far as they uro founded upon this principle, or by borrow? ing money elsewhere nt u cheaper r^lu of iu* toresi than nl home, to redeem the debt at present worth, are completely illusory.'' I A forcible illustrati.?f the correctness of this argument may be found here ut homo. Tho city of Charleston has sunk iu her sinking fund thu mini of $891,02 l.'i't, which was invested to compound iutoro-t and pay the city debt. The estimated value of ihu assets of this fund is set down at $'2-10,907.20, ntion of tlie Six Mill Tax in the hineilt of the I'rincip.il of,the Po u ? El mill! Sl J.inki.UiO 011! I 1I.7imi.inki on ? ll;i7o,ouU no I 11,1*17.1141 nn ' l(l,tilf7,?<N] IHI lii,tOS,470 mi; H,7IA.??u W? UjWi^CU) KU S,?i'.i7,-2:i7 I? s,izit;t4l *? 7,fiiRJ,7Si iwi ii,M>i,4ia S7. 0. 171.413 SB fi,4ai,2SU IV 4,r..is,i'.U US I ajsti.i^. 34 ?J,'JI4.47:i Sli 1, 'jss.:i4i ->\' ?o noii 1)1)0 .01? I ?7 Jii.oi?? i'll 7n*.i,0uu on m-i-jnu o i| 0nn,4'jn ii IS'Ut.4lM <?<? litll.llM -'Hi 5S2,uia so .vvi.r.mi >\ j WI.KH &\ 4 ?7 ..Hi i fill 4."?),'.si; ui 4i1.mu Kl{ ?7il^S4 TO :tjw.s7ii si ? CTS.'AII Oft tSAMl M\ i74,stM in lllMOII 47! flo,4>S fill SlHO.IXiO IKI! ius,inm ?>t 11 ?217.SIHI IM? itW/tSII IM) 20.1,-Vlri IHI :il'.i,*lll so' SH7JKCI 14! ?00,4411 Till 438,10? 7H 40*4,4111 rail fi4U,4l:i im ASM, lift 17 0-.2V.7lfi 07 r.74.iii in 721,KM :n ?74,ii.">2 4s ft!S,ISI ?I us -.iaw tan t,u.i;t..".tl :>o dicious expenditure for public purport's of a fuir percentage of the general weulth, raised by an equitable system of taxation. Tho fruits of such expenditure nre general educa? tion, und guueral health, improved roads, di? minished expenses of transportation, und se? curity for life and property." ? Taxation is not therefore nn unmixed evil, which every otto should mako it his duty to avoid. The tux gatherer is not, us some assert, thu natural enemy of the lax payer. In the eloquent lauguugo of Deems: "I ?1? not look upon taxation na mi unmixed evil; Ihu clouds that gather above us iu thu heavens, duik ns they may seem, dense us ihoy may be, havo yet their guidon edge and silver lining. These clouds uro thu taxos of thu earth lo aup'tort tho great economy of nature. They suck up thu exhalations from myriad Heids and hillsides ; Ihoy absorb thu i mists of morning ami the dews uf eve; but i they do u??t rob the earth, they despoil uot thu meadows which they assess: for through I tho wonderful chcidslry of thu skies thoy re? turn in fertilizing showers, they uro dispensed I in rivulols ami rivers, lo make thu wilderness blossom as the rose, and Iho harvest Heids I laugh with fatness." Kvuu so. under a wise economy of public administration, thu revenues of government applied faithfully, legitimately und honestly may return seven fuld, and produce new fruils ol general prosperity. Uut says some lax payer, " I admit tho necessity for taxation; 1 admit that it is a de? sirable form of expenditure. Hut our repre? sentatives coming, as a majority of thetn do, from thu non-property holding class of our citizens, have been inconsiderate and careless iu ihu levy of an excessive and burdensome rnto of taxation. Taxation has increased at an onormous rate since the palmy day a ante bellum, ami lo a far greater extent than is necessary lo meet the public requirements." let us enquire how far this lax payer's assertions are correct: Under the anomalous system of taxation '? in vogue during the palmy days ante bel? lum" real estate bore but nn inconsiderable portion of the public expense. That species of properly which paid the largest annual premium upon ihu capital invested, could best afford ir> bear the burden of taxation, nnd hence the icvonues of the State came chiefly from tho tax on slaves and an arbitrary lax upon Iree persons of color. For instance. $000 invested iu a healthy male slave would realize yearly ut least $170 upon thu investment. Thu owner could therefore well a fiord to pay the lax imposed, as in IsOft, ol $1 2? upon his negro slave. In I860, according to iho census of thai date, there were in South Carolina 102.1110 slaves, yielding to the Statu a tax of $1.20 per head, or $507,0:11.50, and 0,914 freu persons of color, paying a tax of $11.00 per bond, or $29,742, making a total revenue from taxes upon slaves and free persons of color of $5:10.77:!.fill or nearly uitiu-touihs of the entire amount necessary to carry on tho government. Tho practical working of this.sy stem was iho fostering and building up of a large und pow? erful landed aristocracy ; a man's title to rank und social position depended upon his princely acres. The greatest boast of the Souih Caro? lina gentleman was his inheritance of vast landed possessions, the hunting grounds of his fathers, the pride of his children. The comptrollcr-goiieral, in his report lothu <?<?nor.il Assembly for 1800, staled Hint "the lux 011 all Ihu laud of the Slate, amounting to 17,558,401 acres, produced only $82,515.51, which is less than an average of live cents per acre!" Valuable cotton lands which tho owners would not have sold I'm hundreds of dollars an aero, wer?; valued for the purposes of taxa? tion at live cents per acre. Now, human slavery is iibollsli?d. millions of capital invested iu human chattels have been swept out of existence with a single stroke of the pen. Some other species of ptopurty must tear Iho expenses of iho gov? ernment iu ils stead. Which is it? Thu ex poriunco of the civilized world answers that tho true basis of taxation is real ami personal estate, nnd the new regime in conformity to thai experience has adopted that system for thu now order of things. The practical operation of this now nnd equitable system iu South Carolina is thu same us that experienced in tho North a half century showing a Ions of 73 per cent, of tho amount itivoatoil. Thua it 1ms actually added to the debt which ic was intended to extinguish. Tito plan hero proposed is freo from tho objections urged against tho other. On a cer ? tqin date of each yeur, tho surplus of revotiir, after paying tho interest due for mich yea , Is applicable to tho extinguishment, by tho purchase at its theo present worth, of a por? tion of tho dobt itself, which amount so pur? chased will bo immediately cancelled, and to that ex to at each year tho debt will bo actually reduced. For instance, if ouo year after tho pnsengo of the act h?rein proposod there bo a surplus of $50,000 to bo applied to the extinguishment of the debt, and (ho then present worth or the debt bo flfty cents ou tho dollar, t no board of commissioners could purchase. $100,000 of bonds or stocks liavlnjs ntlnehed thereto nine? teen years' worth of iiumattirod coupons or interest orders, or $114,000. Thus $50,000 iu cash would reduce the dobt, principal und intorost, by $214.000. If during tho tenth yenr of the opeifttlou of this fund, there be $.'?00,000 applicable to tho extinguishment of thu debt?and we propose to show that there will bo that amount?and, if thu thon present worth of the bonds bo as high as 00 cents on tho dollar, tho board of commissioners could purchase $555,553 of bonds or stocks, having attached thereto ten. years' worth of uunmlurcd coupons or in? terest ordern, or $333,333; and $500,000 would reduce the debt by $H88,883. Even at par $500,000 ?t this time would reduce tho principal and interest of the debt by $800,000. Tho accompanying table will exhibit the probable operation of this surplus fund in tho extinguishment of thu public debt. Payment of the Interest and the hlic Hebt. -a - p r3 Eg 0 l k < I < U k < 0 Milts. I fco/tvo 70,000 80,000 100,000 ido.ooii (Ml! .i.io.ixio no ??CI.0O0 00 :i0?,:MXI OU 4.10,2(0 ixi ia?,is9 04 4*9,444 Hi 1,28,509 72 570,S'J.'> OS oiii?W as alamos st nul,09ri ai 740,13.1 37 "tr.i.iwi) in 849,008 I'm 874.r.T>2 48 925,131 iu 0811.09? 63 ,007,041 70 75 Cent*. >-> t'.i.:. SI 00 ago. Tho taxes full chiolly whore they .be? long?upon real estate. Tho owner, of real estate cannot afford to keep thousands of acres Idle and unproductive merely to gi iy his personal vanity, and because lie inherited them from his fathers and pay tho tax upon them. Stern necessity, therefore, will compel him to cut up his ancestral possessions into small farms, nnd sell to those who cun and will make them productive : mid thus the masses of the people will become property holders \ wealth will be more widely diffused : the peo? ple Will become moroprosperous; Immigrant?, will come and settle amongst us nnd develop tho vast resources of the State. Thus on? ward the march of civilization makes its wuy, and no cry by the large real estate owner of oxcossivo taxation can stay its progress. But aside froln this view of tho question there is another which I will now present. That the aggregate amount received from btxa lion since 1800 has greatly increased, is u fact which none will deny ; but this is also true of the national government, and of every"Suitu of the Union. Tho question ? is not whether taxation has or bus not increased, but whether the comparative rale of increase is grcntcr iu this than other States of tho Union., Tho following table will show the increase of taxation between the years 1800 nnd 1870, in Ove Democratic States, as shown by the ninth census : >< . states. Aggregate, Taxation,IneivaacIn,.Av.-rago ISiW). 1S70. Ill years, an. Inrr'a. Konrgia, $ 797,SSa $2.027,029 $187 22 7-10 Ttftim-HM-c. l,lu-J,79:l 3,831.579 2.00 2OG-10 Mnrylaml, 2,lfts,s!l5 U.022.9INI 2.2? 23 Kentucky, 2 14s.24t 5.780,118 1 OU 100-1(1 Missouri, 4,109.0?! 13,<juS,49S 9.14 21 4-10 Uvueral average annual inrreasc, 20 0-10. IS?O. Wll. S. Carolina, $1,230,830 $2,707,075 $1.1G 11 C-10 Thus it is seen that while tho average an? nual increase of taxation iu those live Slates has been 20 0-10 per cent, in South Carolina it has beun only 11 0-10 per cent. The aggregate taxation of the national gov? ernment bus iucreased from $94,186,740, iu i860 lo $,2S0,591,52l in 1S70, or an averago annual increase of 10 4-5 per cent. Tho following table will exhibit tho jwr capita luxation In several of the States, (as shown by thu ninth census,) and by this table, also, South Carolina gains by tho com? parison. Stati'8. I'npti- Agiircgnto Pur Intimi, taxation. cit|ilta. Mnatactiuaetts, 1.457.851 $21,922,900 *10.S4 New York, 4,3>2.7.'U 4S.MMX80S 11.09 Ohl?, 2.i;r?VoVl 88,580,648 8.75 Mm v I mi.1. 730,394 r.,lV!2.sl2 S.49 Kentucky, 1.821,011 5,730,113 4.88 South Carolina, 7u.\Cud 2,707,675 3.92 The per capita taxation of tho United Slates, according lo the ninth census, is $7.27. The State of Nevada with n per capita toxu tion of $10.40, and tho Stnto of Florida with a per capita, taxation of $2.04, probably re? present the extreme and mono of the per capita luxation of the different States. Tho averago per capita taxation of tho thirty-seven Stales comprising the American Union is $7.27, or $3.30 inoro ihun that of South Carolina. Tho foregoing illustrations prove conclu? sively that thu rale of taxation iu this Stnto is not excessive, nud that the increase sineo 1800 bus not been greater than that of tho United States or tho several States. It will bo noticed from tho foregoing tables that tho State of Massachusetts, unquestion? ably the liest governed Slate of tho Union, is, with ono exception, tho highest taxed of any Stnto of the Union ; and, notwithstanding tho magnitude of taxation, tho aggregate receipts have not been suflicicnt to prevent na annual increase of the public dobt. CONCLUSION. Senators and Ileprosonlativcs, permit, mo to express the hope that, while differences of opinion, incident to the right of freu discus? sion among independent and untrammelled Legislators, will bo asserted in your respec? tive Houses ns to the gravo questions pro Hcnlcd for your consideration, your delibera? tions may be marked by an earnest and undi? vided purposo lo advance the common inter? est of the people and tho truo wolfaro of the Slato. Aud to these ends I sincerely invoko npor. all your counsels tho benign gnidnneo of mi Omniscient Providence, Fiuxknn j. Moses, Jr., (loverdor of South Carolina.