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SUPPLEMENT TO The Daily Phranix. &EPLY OlN T UE SfATK THEAS CK ER Ta the Special Joint CoBjmlltee. ? ?t ' -? " : ' f \ EXEOUTTVa DBrtlftTMKNT, ''.?;., Office or State Trsasoukb, Columbia. 8. 0., March 1, 1875. $ 10? Honorable the Howe of Representatives : " GfEKTtjKiiEN?I liHve carefully read the re? port of the special joint committee appointed "to ascertain what bouds of the State have baeSiftifided under the act to reduce the vat* ??ne oT tho public debt and provide (or tho payment of the same; what interest coupons' have been funded under the said act; uod also whether the Hinds for tho payment of interest raised under tho said act have been koptaepo rato and apart from all other funds, as pro? vided for In tho said sot and Ss otherwise pro? vided by luw,n and hsvo the honor to make the following reply.:., ,,uli j . I would state, in the first place, that I have not taken the trouble to verify tho stntotnent of the committee with regard to tho funding of detached coupons. It may or it may not be correct. The committee aro entiro'novlcea in distinguishing the cluss'of bonds to which the coupons belong by the, face of the coupons. That can be successfully done only by experts. The question, however, is immaterial, and I sin perfectly willing to aocede tho correctness of the committee's statement, and argue the case upon that assumption. I simply refer to the matter here, because the entire premises or the committee may bo incorrect, add their conclusions, therefore, worthless. The* points of the committee may :be enu? merated as follows: "? 1. The committee blame roe for funding cer? tain hypothecated bonds. 2. The committee, declare tho funding of $241,011 coupons that. matured ou or before July 1,' 1871, a fraud upon the State. 3. The committee deolarp the' funding of $194,846 coupons that were cut off bonds, as is alleged, before they were hypothecated, as a fraud upon the State. 4. Tho committee declare the funding of $6,960 of coupons of conversion; bonds, out off, as.is, alleged, before they were ezohuuged, as a fraud upon the State, 6. The committee, declare the , funding of $9,205 of coupons that belong to bonds '' can? celed unused " aa a fraud upon tho State. G. The committee charge a want of vigi? lance. 7. The committed charge a diversion of the interest fund. ' 1 - It might be successfully answered, in a general manner, so far SB the first three alle? gations of fraud are cofttemed, that the law authorised. tbe funding' of these coupons. Section 1 of the act to 'reduce the volume of the public debt enumerates tho classes of bonds tO be funded. Soot ion 2 then states that the coupons belonging to tho bonds enu? merated in the first section should also be funded. It may have been " a freed upon tho State " for the legislature to have enacted such a law, but it certainly was not a fraud upon my part to have executed it. But' I do not think it was a fraud in either case. I might safely rest. tho case Upon the au? thority and requirement of the luv, but 1 am not content to do so, and will, therefore, dis ouss the points ..mado . by the committee seriatim: * ? 1. The committee- state that I have funded I Conds that "the unanimous voice of the senate said should not bo funded," while they knew it had been done before they uttered that voice.-1 am under the impression, though it may seem strange to " the unanimous voice of the senate," thai when I entered upon the dutios of my office I took a solemn oath, and gave a bond of $100,000, to obey the consti? tution and the laws of tbe State, not M the unanimous voice of the son a to." If "the unanimous .voice of the senate" could only get a majority of the house and tbe governor to agree with them, and then proceed in a constitutional manner to oxpress their will in the form of a statute repealing the existing law under which I am now act? ing, then it would he my duty to obey "the unanimous voice of the senate," and the ma? jority of the house, and the wishes of tho gov? ernor. 'But Until that takes place I shall feel compelled to pursue the even tenor of my way, notwithstanding "the unanimous voice of the senate." But the committee that made that recom? mendation, and " the unanimous voice of the senate," do not, iu my judgment, comprehend tho real question at issue when they advise that certain bonds hypothecated in New York should hot be funded because mouey had been raised upon them in excess of the amount authorized. The State had received tho money and used it during the 'administration of my 'prede? cessor, ahd the question now Is nur the right of the parties who hsd tho collaterals, or off tho third parties who may have obtained pos? session of tbem by purchase under forfeiture, to fund tbem, for of thoeo propositions, espe? cially the latter, there can be no question in the minds of those who understand common legal and business principle*, notwithstanding "the unanimous voice of the senate." But will the State redeem the bonds from the par? ties who hold them now as collaterals, by paying them baok their money which it used, and receiving the bonds in return, a proceed? ing Which the holden of tbe hypothecated heads very anxiously dedre t r?*y, ' The proper thing for tbe StJite to do, it seems to jnei is to make * ofanpuuvlon, and see whether it la hesvable to pay the-debt it ?t>wes to these partls? from whom the money was obtained by'a tax levied upon tho; people now, or to give connolidatinn botsda ?a*Vb'eu Of the collaterals which they hoj$fj Here ia the real question : The committee appointed "to ascertain what 'bauds of tho' Stole were \*h ? .-v ... ?If. pledged by the financial agent of the Stute as collateral security for State loans," Ac. stated that the Stato was iudcbted to sundry persona,. :in"*New "York for the sum of $5*7,622.60, borrowed by the financial agent at various dates between September, 1871, and October, 1872. This sum was secured by $1,848,300 of Shite bonds. Tho two years and a half interest due on the amount borrowed would aggregate, at tho rate of seven por cent, per annum, about $90,000, making a total of about $643,000. Now, tho real question if>, whether it is best to issuo about $925,000 of consolidation bonds m lieu of tho bonds hy? pothecated, or to levy n tax now to pay this debt of about $643,000. In conversing with that distinguished financier, Hon. G. A. Trouholm, as to which of these two courses it would be best to pur aue, bo stated that it would be best for the State to pay tho doht it owed by the issue of consolidation bonds, iu liou of the bonds outstanding, rather than to levy additionul tazos upon the people nt prcsout; or, at any rate, ho rcmarkod, that the Stato did not lose the equity of redemption by funding them. But downright repudiation, which "the unanimous voice of tho senate" attempts, seems to me a violation of ono of tho com? mandments I 2. The committee regard the funding of coupons that matured on or bofore July 1, 1871, a fraud upou the State, because, as they affirm, the State was paying interest on its public debt iu gold, "and as there is evory reason to believo that the whole ot the inter? est due by the Slate from 1868 to July, 1871, or after, was paid previous to October 31, 1871, tho committee are compelled to believe that these coupons were not n valid claim against the Slate, and that, therefore, it was u fraud to fund them." This ia tho substance of the committee's reasons for making so grave a charge as fraud against the State?a mero inference that Inasmuch as tho State was paying interest, it was highly probable that if tho coupons wero outstanding at that time, they would havo been presented for payment, and paid. I graut tho probability of their being presented for payment, but their non-prescnlalion is not prosumptivo evidence of fraud; there is another and more certain method of proving fraud than relying upou such possibilities or probabilities. to The question of the payment of interest and the legality of outstanding coupons is not a subject of conjecture?it is a matter of positive record in tho offico of tho treasury ; and, as I have said in my testimony, I mado tho subject of tbe interest upon tho public debt u matter of careful study before I funded any detached coupons. I ascertained that there wero coupon3 in the treasury as vouchers corre? sponding to the amount of iulorest recorded as I paid. I would hero remark incidentally that all coupons, and indeed all vouchers, in my office were canceled before I entered it, as Captain Little testified before the committee. I then saw from the records of tho treasury that tbere was a large amount due to tho ac a count of the interest on tho public debt. ' Tho committee stato that thoy discover, -from the reports of the comptroller-general, that the stale treasurer paid $14,384.16 moro Interest for tho four years, 1868, 1869, 1870, 1871, than the comptroller-general's estiraat.es called for. This may or may not bo truo. I have not taken the trouble to verify it, as it is immaterial. The comptroller-general's esti? mates aro not tho proper sources from which the account of interest on the public doht may be ascertained. This account, as well us all others, is upon tho ledgers of the treasurer's and comptroller-general's offices, and appears upon the debtors aud creditors statement of the oomptrollor-geuoral's and treasurer's Be ports, where it will be seen that instead of the account being over-paid $14,384.16, the Slate really owed, October 81, 1871, tho sum of $997,571.06, loss $430.324.75, tho amount paid by Mr. Kimpton, and accounted for by the treasurer iu his account of tho following fiscal year. I present here an account of tho interest on the public debt from 1868 to October, 1871: AMOUNT OF INTEREST DUE. Oct. 31, 1869.$ 843,078 12 Oct. 31, 1870. 519,447 50 Oct. 31, 1871. 632,261 97 $1,804,781 59 AMOUNT PAID BY N. O. PAKKEIl. Oct. 31, 1869.$629,269 12 Oct. 31, 1870. 190,879 44 Oct. 31, 1871. 177,067 98?$897,216 51 Seo comptrollor-generul's report, 1871-72. 997,571 05 Amount paid by H. H. Kimptou, 1869-'70-'71 . 430,324 75 Interest outstanding to October 31, 1871. $567,246 30 3. The committee dcclaro tho funding of $196,845 of coupons that wore cut off of bonds, as is alleged, before thoy wero hypothe? cated, as a fraud upon tho State. To sustain this charge tho committee stato that "as the report of tho special joint com? mittee appointed to ascertain what bonds of the State ware pledged by the financial agent of the State shows that these bonds wero pledged by the financial agent for Stato loans after the maturity of these coupons, it is ovi dent that theso bonds must have been the proporty of the State at the time those cou? pons matured. Of course thoso coupons must have been tho properly of the State as well; and their surrender and receipt for the pur? pose of fit riding, and the issuing of consoli? dated bonds or certificates of stock in their place, was a fiaud upon the State." There la an Important error of fact coolly assumed in this paragraph, which it ia very important should be pointed out, and tho con? clusion of the committee then falls to the grcanxl. Any one unacquainted with tho facts would naturally in/or that the hypothecation of the hoods referred to in this report, as taking place after the maturity of these- coupons, was tho jiroHiypothscation of these bonds. Thai is positively incorrect, to my certain kuowledge, and has been again end again shown to be so. These bonds sre alleged in tliat committee's report to have been hypothe? cated in 1372, and stated so as to appear that this was their first hypothecation ; whereas they were hypothecated for tho llrst time in 18G0, soon after thoy were authorized to bo issued, and doubtless may havo been hypothe? cated twenty times between these two pe? riods. The fact of theBe hunt's having been hypothecated llrst in 18G9 annihilates tho conclusions of the committee. There is also nn error of law implied, but not expressed, in this part of tho committee's report, and which was more fully exhibited by tho committee in their examination ot me during the investigation. Tho committee assume?or, at least, its chairman, Senator Dunn, does?that all cou? pons that mature upon bonds during their hypothecation and before their sale are tho property of tho State, and, therefore, should not bo used in nn)' manner whatever, and should be cut off when the bonds are sold and returned to the State. It is a well-established legal principle that the party holding bonds as collateral security havo a right to collect tho intorest upon theni which matures during their hypothecation. "This principle ol law," says an eminent authority, " which allows a pledgee to havo the benefit of all iutorest or incremont accru? ing upon or from the thing pledged is familiar and unquestionable, and is specially stated iu 'Story ou Bailments,' section 314, and else? where. The inlcrcBt accruing on bonds under Hypothecation is a part of tho pledge itself, and is not tho property of the pledgor in any other house than the bonds themselves." Beforo the committee, therefore, can sus? tain themselves in tho position they have taken, it behooves them to show that tho par? ties to whom the bonds wero pledged did not exercise this their undoubted right. 4. The committee declare that the funding of $0,9ii0 of coupons of conversion bonds, which matured beforo tho bonds were used in ex? change, is a fraud upon the State. The committee affirm that these coupons matured January and July, 1871, and that, '-as these bouds are shown by the records iu tho treasury to havo been issued at various dates, botweon November, 1871, and March, 1872, it is cvidonl that these coupons, which matured many months before, were the property of the State at the time of their maturity; and their surrender and receipt for tho purpose of fund? ing, and the issuing of consolidation bonds in their places, was a fraud upon tho State." The term " issued " refers bore, I presume, to the period at which these conversion bonds wero permanently exchanged for other bonds. It is a matter of fact, to which Mr. Parker and Captain Littlo will testify, that theso bonds wore outstanding prior to that time, in accord? ance with a custom of Mr. Parker and Mr. Kimpton, in pursuance of tho act of March 20, 18G9 (seo volume 14 Statutes at Large, page 259), cuabling the financial agent to hypothecate any securities ho may have in his possession belonging to tho State. The facts connectod with this case ore po culiar, and I distinctly recollect thorn. Thu last lime that I ever sealed any bonds of the Stato while secretary of staio was in October, 1871. It was then that I tirst dis? covered that the conversion bonds wero being used iu what I deemed an illegal manner, and I positively refused to seal any more. The process ol conversion, however, was contin? ued by Mr. Parkor, aud ho had thon to recall such conversion bonds as Mr. Kimpton could release from hypothecation iu New York, and use them, when returned to tho treasury, for the purposes of conversion. Theso bonds wero returnod with the matured coupons cut off 5. Tho committee declare that tho funding of $9,205 of coupons belonging to bonds la? beled canceled, unused," is a fraud against the State. Tho committee do not state at what time theso particular coupons were fundud. If that fuct were stated, 1 could more easily verify or disprove this statement. It would consume a vory groat amount of timo for me now to ex? amine every ono of the $801,030 of detached coupons which the cigiit members of the committee took two weeks to examine. It would bo very easy for them to furnish tho data uocossary to prove this statement, as thoy examined tho packages of detached cou? pons in tho chronological order iu which they were put up as vouchers. My object in thus dwelling on the impor? tance of the verification of this Statement of the funding of tho coupons of these particu? lar bonds, while iiidifibrent to tho verification of the assertions upon which the three pre? vious charges are based, is this: The correct? ness of the statement with regard lo tho funding oj certain coupons, upon which the first three charges arc made, is a matter, iu my judgment, immaterial; and if any such coupons ns thoy sr.y havo been funded aro not yet funded, I will fund them whenever pre? sented, as directed by law, until the law in that ruspect be modified or repealed. But with regard to the funding of the coupous of these particular bonds, the circumstances attending thorn aro different, and I would hesitate, as I have done, to fund them for this reason: Sec lion 1 of tho act to reduce the volume of tho public debt recites tho amount and class of bonds that shall bo funded. Sectiou 2 of sa id act slates that tho coupons belonging to tho bonds enumerated in section 1 shall also be funded, aud these particular bonds, labeled ?'canceled, unused," iu the treasury, are not included in the amount of bonds of that class authorized to be funded. It might, therefore, vory proporly bo questioned as lo whether the outstanding coupons of theso bonds should he funded. If tho letter of tho law should be strictly applied, theso coupons ought not to be funded; hut if tho spiiit and intent of tho law were taken into considera? tion (of which I shall apeak more, fully here? after), there would be no objection to tho funding of those coupons, inasmuch as the spirit and intent of the law contemplated tho funding of all outstanding coupous, except the coupons of the conversion bonds declared to be illegal. It is duo to myself to state rnoro fully the circumstances attending the rejection of tho $1,300 or $1,100 of coupons reforrcd toin this connection by tho committee, and which, in tho manner referred to, might place mo at a disadvantage in tho opinion of some. When inj- attention was called by Captain Little to tho ?1,300 or $1,400 of these cou? pons presented for funding I was surprised, and staled to him that 1 was not aware that any coupons at all had been cut off thoso bonds, us I understood tho term "unused" to mean that thoy had not been used at all by my predecessor, and, therefore, had never boon issued from tho treasury. 1 thou in? quired of him if any coupons of those bonds had previously been presented for fund? ing, and he assured mo that none had been, aR he had n list of thorn before him always nnd woidd have delected them. I then obtained a list of the UUipberS of the . bonds, and gave instructions to my clerk not to fund any coupous belonging to them. There arc live coupons cut off each particu? lar bond. The bonds amount to $101,000, and arc seven per cent, bunds, thus show? ing that $17,675 of coupons havo neon takeu off. Tho committee assert that $9.205 of theso coupons have been funded into $4,002.50 of consolidation bonds. Captain Little assured mo, as I havo stated above, that none of these coupous had been funded. When that question of fact is settled, I stand ready to give to the Slato one-hall of the $4,002.50 of consolidation bonds issued in exchange for tho $9,205 of coupons surrendered when a court of law shall decide, in view nl the spirit and intent of the law, that I should do so. The comptroller-general will doubtless remedy his mistako also, if necessary, by giving his half oi iho bonds required. It is a singular fact that, notwithstanding tho comptroller-general is equally responsible with mo for the faithful execution of the law, the committee visit their censure upon mo iilon?*, while he is not referred to iu tho most distant manner. I still maintain, however, as n matter of jiistire. that tho holders of these coupons have just as much right to fund them as those who funded other coupons issued iu tho same manner. As a question of law. howover, it may very properly he questioned. These very $101,000 of bonds, now marked "canceled, unused," in tho treasury, were issued to Mr. Kimpton in 18C9,andalterwards returned by him in October, 1S71. ns 103* journal shows. The coupons which matured while they were iu use were doubtless cut off, as was the case with tho coupons of all other bonds. Tho commilteo have made u very serious mistake in the numbers of these bonds given by them in their report, and instead of giviug $101,000 of bonds, they have given $131.000 Tho numbers, as my journal shows, uro 777 to SIS, S20 to fc27, S?9 to 9015, 9S3 to 985, and not 329 to 906?a difference of thirty bonds. If tho committee have estimated from 829 to 90G, instead of 859 to 906, in making up tho number of coupons, they have charged me with tho wrongful funding of the coupons of thirty bonds, which would make a very great difference iu their aggregate. Whore is the committee's expert? G. 1 am charged with a want of vigilauco til the execution of the '?funding law." Tiio best reply to this charge, which is very singular under the circumstances, is to relato bricliy tho history ot this law, and then mention certain facts which tho commilteo might havo referred to in their report. When 1 became treasurer 111 December. 1S72, I immediately sought an interview with Governor Moses, aud eonforred with him on tho financial condition of tho State I told him of my earnest desire to place tho finances of the State in as sound a condition as possi? ble under the circumstances, ami restore the credit of the State: and that if our debts were adjusted and settled in an equitable manner, and the payment of interest on our bonded debt resumed, and our assessment of property and rale of taxation reduced, and iho tax levy made in a specific manner, a cer? tain amount for each particular object or class of objects, and then collected with more care and strictness, and, ubovo all things, if the disbursement of the taxes was made iu ac? cordance with the levy, that is, when the en? ure amount raised from the levy was dis? bursed, each class of objects should have re? ceived its proportionale share of the whole? if such a course was pursued, I slated to Governor Moses, I thought tho people would bo satisfied, and tho State would bo prosper? ous. Governor Moses told tue that he would leave all such matters to mo, and to do just what I thought proper. I then went to Xow York, and after con? ferring with several distinguished financiers, 1 adopted the plan with regard to our bonded debt which had been pursued by tho States of Illinois, Indiana aud Michigan, in tho earlier pint of their history, under circumstances simi? lar to our own, and which is being seriously considered now by tho States of North Caro? lina and Virginia 1 then had a most thorough investigation of tho whole subject of the bonded debt in every respect, nindo by one who was thoroughly competent to perform tho task. Seven months of constant and unremitting labor wero spent by us iu the investigation aud study of this subject. The law was thou Ira mod by culling those features of tho laws of those States re? ferred to above that wero suitable to our cir? cumstances, aud udding such additional fea? tures as would make Iho law as strong as pos ! :1.1c. I distinctly remember determining upon this feature of tire law, as contained in section 2 or the act with regard to the funding of the in? terest upon the debt. I know from tho man? ner in which our bond* hnd been hypothecated in New York, it would probably be difficult to trace the coupons belonging to them in every instance. I, therefore, decided that it would bo better for the welfare of tho Sluto. and tho restora? tion of our credit, by tho resumption of the payment or the interest which had been sus? pended for several yours, to include the inter? est outstanding, and it is so included in sec? tion 2 of the act iu distinct und emphatic terms. When the legislature was considering this section of the act, th-tl was tho proper time to examine this subjoct. But the general assem? bly then wisely concluded that it was fur bet? ter to settle the whole geueral subject than to bo wasting tho time on comparatively trifling features of it, especially as they compelled the holders, juBt on account of such irregularity, as well ns tho inability of State, ' through the misfortunes of the war, and tho i extravagances subsequent thereto, to tnko , bonds equal to one-half only of those they sur? rendered. I Tho law has elicited from the Charleston News and Courier this compliment, that it was l framed by iho ablest lawyers and most dis? tinguished financiers of the State. The editors did not, perhaps, know who wero the real authors of tho law, and to whom, there? fore, this compliment was justly applicable. It was appreciated, howovor, all the same. The bill was then introduced in the legisla? ture, and" its passage carefully watched and urged with all tho power and influence which my position as treasurer gave mc. It was passed by tho legislature substan? tially as prepared on December 22, 1873. And now I began to experience tho effect of one of those mistaken views of economy practiced by the legislature. I had asked tho general assembly for an appropriation of $10,000 to have plates engraved and bonds and stocks printed, the records necessary for such elaborate transactions, tho additional clerical forco necessary for tho careful execu? tion of tho law, and making the proper adver? tisements to the bond holders, scattered all over the country. The general assembly appropriated just one half ol the amount that my most careful esti? mates called for, although tho execution of this law will save tho Stato $13,000,000, by the reducing the volumo of the public dobt from twelve to six millions of dolars, and saving tho State twenty years' iutcrest at six per cout. upon that amount of principal. Tho consequence was, that after having tho plates for the bonds engraved and the bonds printed, and obtaining the necessary records and stationery, and making such udvortise moots as wore absolutely essential to com? mence tho execution of the law, I had no money left to employ the only^ie who was thoroughly prepared, by fourtoTu months of study of this subject, to act as clerk, and I. therefore, lost his valuable services. I theu spent sevoral months, with the in? valuable aid of my book-kcoper, in devising a system for the execution of tho law, and the preparation of a plan of records for the transactions, and selecting the style and class of bonds and slocks. It was Juno 1,1874, eigh? teen months after I entered my office, and began carefully to study tho subject before I was prepared to enter upon the actual work of funding. I then had to depute my chief clerk, who had not given special attention to this sub? ject, to perform the work of funding, in addi? tion to all his other duties, and it has only been by most earnest and unremitting vigi? lance that no more mistakes have occurred under the circumstances than tho, probable one which I have acknowledged. This leads mo to mention certain facts which the committee might have referred to in then- report, as an act of simplo justice to me and my assistant. They examined $864,03(1 of detached cou? pons, put up in fifty or sixty different packages as vouchers, und hundreds of thousands of bonds, and compared them with the transac? tions as recorded in tho books, aud found them in every single case to be perfectly cor? rect. But, moro than this, iho law positively for? bids tho funding of $3.0?."i,000 of tho conver !on bonds and the coupons belonging thereto, while it requires $1,577,500 of the sumo class of bonds aud coupons to bo funded. Theso bonds aud coupons wero distinguishable by their numbers und tho color of their nun - hers. Senator Dunn, the chairman of the joint committee, watched for tho bonds and cou? pons of the bonds that wore prohibited by law from being funded with all the vigilance that a sleepless malice can inspire, and, to his evident chagrin aud mortification, did not dis? cover a single one. I do not think that it is necessary for me to say anything more in reply to tho chargo of tho want of vigilance from a committee who made a hasty aud su? perficial examination of three hours a duy for two weeks of a most difheolt and complicated subject, which thoy acknowledged, when they entered my office, they knew Hille about. I havo watched over tho execution of this law with tho utmost care, and challcngo the most rigid scrutiny of any one or all in the Stato or out of it who aru competent to mako an investigation. It will be soon by reference to my annual report for the fiscal year ending October 31, 1874, that tho interest fund had a balance to its credit of $105,481.87. Now, porinit mo to relate au occurrence which, if it had been otherwise, would havo been a real diversion of the interest fund The board, composed of the governor, comptroller-general, treasurer, chairman com? mittee of thianoo and chairman committee on way s und means, who were authorized in the "act lo reduce the volume of the public debt'' ._-n. \ to apply a surplus remaining in tfie. ..treasuryr after' flie payment oftho 3uid interest, to the extinguishment of the public debt, end to do do othor purpose, desired to apply this bal- . ance last Tall to the purchase of bonds. I objected, stating that that would be ? diversion of tho fund, as tho phrase, "after tho payment of tho said interest," meant all the interest that would be duo after all the bonds were exchanged that could be. ex? changed; lor, if any other construction were put upon these words, the funding law would be utterly destroyed, inasmuch as the interest on tho old bonds to January 1, 1874, only were authorized to bo funded, und I would have no money on hand to pay the interest duly 1, 1874, on tho consolidation bonds, and there would thou be no inducement to make the xchnnge. The board was very much disappointed at this construction, but tho in? terest fund was not diverted. AS TO thi2 funds FOU TUG i'avmknt OF INTKB E8T. 7. Tho inquiry upon this point which theoom mitteoe was authorized to m.iko is, "whether tho funds for the payment of interest raised under tho said act have boon kopt separate and apart from all othor funds, as provided for iu the said act, aud as otherwise provided by law. Tho conclusions of the committee upon this point are presented in their report with great emphasis and confidence. They declared thai "these hinds have not been kept separate and apart from all other funds, as WUS required by law." 1 take issue with tho committee upon tins conclusion, and T assert, with equal em? phasis and coufidenco, that I have never for one moment or in one instance violated any law in my management of any fund of tbe State. Tho committee are very liberal in bold statements, unsupported by proof or argu? ments, but there ia a plentiful lack of such reasoning or principles of law as would better ?< have become a report which bears the sigoa lure of at least otie gentleman who may be regarded as qualified by his ability and pro? fession to discuss tho questions involved. I do not propose to follow the example of tho committee; on tho contrary, I intend to show . that from some causes?whether malice, igno rance, or inadvertence is now immaterial? they havo now arraigned me before the pub? lic upon n false and unfounded charge in re? spect to the matter now under consideration. The committee content themselves with ex oa* thedra announcements that my conduct is a "ilagraut violation of tho law ;" that my con? struction of the law is "as monstrous as the violation itself;" that my reasoning is a ' bold assertion," and my action is "to deride tho contract made by the State with ih* holders of the bonds." It may be becoming and competent for this very learned commit? tee to announce conclusions without deigning to point out any grouude for such conclusions, but I shall claim no such privilege, and shall feel it incumbent upon mo to set forth the grounds upon which I confidently claim that my conduct has been at all points and tlmea in strict accordance with law. The first provision of law which bears upon the prescut question is found in the ninth seo tion of the supply act of December 22, 1873 (acts of 1873-74, pago 516), and is in these words: "That the proceeds from the taxes levied in the first sevon sections of this act shall be kept by the state treasurer Separata and apart from each other and from other pub ? lie funds, und shall be applied to the purpose* for which they are respectively levied and none other." The same section re-appears in the supply set of March 14, 1874 (acts 1873-74, pag* 659). Tho next provision of law that bears on this question is found in the seventh section oftho "act to reduce volume of, public debt," &c, passed December 22, 1873 (acts of 1873 74, poire 521), which provides "that the funds so created shall be kept separate and apart from nil other funds, and shall be applied, first, to paynioot of tho annually accruing in? terest upon the bonds and certificates of stock herein authorized; second, the surplus re? maining in the treasury after the payment of the said interest shall be applied on or before the first day of July of each year to the ex? tinguishment of tho public debt, and to no other purpose." These are the provisions of law which reg? ulate my duty in the premises, and the aim pie qucstiou is, what do they require of me as treasurer? What is meant by the words 11 separate and apart from other funds," and "shall be applied to no other purposo?" There uro two rules of construction which arc applicable to the construction of statute**? the one, which may bo called the literal, and the othor, which may bo called the reasonable. In some cases the literal construction may be the only admissible one, and in other cases it may be equally apparent that tho words of statutes wero not intended to be used in their literal sense. This latter view has passed into a familiar maxim of the law : " Qui haeret in Hiera, haere! in cortice." " Be who dings to the letter clings to Die l>ark." But tho one great canon of construction which prevails on all occasions is the spirit and intent of the law. Indeed under this broad rule are included other principles of construction, which ox press tho wisdom of centuries of jurisprudence, such as, that a statute must, always receive a reasonable construction; that such a construc? tion shall be adopted sb will remnrtvthe^Jrtt complained or, and that, of two odtflH structions, that oa* shall bo prefH best promotes the general good. ? Let us seo now whether thefl quoted from the etattitea is such afl us to adopt a literal constructioaM tiiflcaut words are "shall be ke^| and apart from all other funds." v| I would a literal compliance with thH H require? It would plainly requireB H material, tangible separation of th<H H the State into several visible miiPsesH