Historical Newspapers of South Carolina

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SUPPLEMENT TO ' < COMJmjM; SrO* tfarch 1, 1875.* ] fy'itf'&sfibratlc the Hans? of AeprcsenLtives t * SjpMfa??*l have carofujly read the re? port of the special joint cpmmittae appointed te ascertain whaT bond* of th? suta have ' ided under the ac$ to reduce the vol public debt ?fid' provide (or the i of the ?tiue; what interest coupons' have1 been fuudod undot tue,?aid aot; und also whether the funds for the, payment of interest raised under the said act havo boon keptaspe? rate and apart from all-other funds, as pro? vided for In the said a?tabd ?s otliorwise pro? vided by law,* and fiSVo the' honor to make the foxingjreply,: j??g . . , ., I would state, in the first place, that I have nottettenthAjtenble .to verify the statement of the CO*5!r!!?l?? ?Uh roaaxd to tho funding or detached coupons ? may or it may not be correct. kTbe oommlttw a>e e?ilresnovices in distinguishing the 'cltiaj-Of boids to which the coupons beloiig; tti?ta'c? of the coupons. That esn be auceaajfu^ d^n^niy)fer experts. The qoeatkm, howsver, I* .immaterial, and I perfedtty yrluxaft it? acjpeds the oorreotneaa of* the bomttrHtee'B Btntenjent, and arguo the caeoiupon that assumption. I simply refer to tho matter here, because tho entire premises: of the cbmmiUee may bo incwrr*fct,'AtM their conclusions,. therefore, w?rti less. ;Tbo* points of Uio com mi ttee may (be h The committee bjaroe tde for funding cer? tain hypothecate botitW \. , 1. The c?mmittee^de^larept^o'.f1yuding'of ? $841,011coupons that -jnir: ' - Juiarn^>B71j*v^va^o0 a. The committee dec Si?sjweeopoustha^w ??lla^bffpssthej^ a;(raud upon the State, .', I. - Ther 'WrmrflHtee' declare the funding of mm&m&M** coi^i^^a, $i off, es/.is, alleged, bWoffitlfffi were exchanged, aat? fitaad upon the Siats\ ; - ? ''' 6. The oommilWe",'rleclore jthe , funding.of f^aoS^coopoa* th%fr^c?g fobfcaskl: ''can? celed unuflod " as a irfl?dAipoaitn? State. - . . T he1 comm((ttas onatgd a Want, of vigi? lance, ' - 5? committee charge * Aversion of the. uitere*fuod. S^^ff^ It might bo Bu?^f*)lr answered, in a general, manner, so far as'die first three alle gationaOf fraud are *o*Uvned, tiat the' law niiftippjayf i tjkejj funding ' ofr Shede orfopoos, Sec^l^,theia1?,' the pubho debt enui bonds-to'.be funded. the volume of | the 'classes of I 2T thee stats* that the coupons bcloatfug to the bonds enu? merated in ' tiie 'first *eetf*n should also be Upon ihe au re, dia . the ; committee for the legialature to nave enactedauch. a.law, , but it pertainly was not i! fraud upon my part to have Executed lt. J^l dd notthipk it was .ih,salWelth#ctepl I might- ?faly^rajt,^ tbpxity and feauiromopt ot not contend to db'So, an? IhV sertatton; ' 1. The committee, statf that I have [funded lf 'bonds' that' "^MuMMyHis voice of the senate said should not bo fbnded," whflo they knew' it' bid been .done before they uttered that voice/if am under, t$e impression, though it may seees strange to ''ike unanimous voice of tbf senate,'' thai w^heh I entered upon the duties'of ;tty. office I ^pok. a solemn oath, and gave a bond of $100,Q??, to Obey the consti? tution and the laws of the State, not "the UDanimbua voice of the Senate.1' If "the-unonimoua i voice of the senate" could only get a major^ty of tho house and the governor to agree with them, and then proceed :u a constitutional uwuner to express' their w?l In the form of 's etatute repealing the existing law Under wbVh A am now acl irlg,"fs<a?.lt would^e my duty to obey "the unanimous voice of the senate," and the ma? jority of the houst, artd the wtehea of the gov erhoV? ':Butundl;'that'.takes, place I shall feel ossapsllsd to pursue the- evert- tenor of my way, notwithstanding "the unanimous voice o^etktl^H *** ] 'v's ? ' ' * But the' committee' that made that reoom meodaxioo, and ',' thp unanimous voice of the eenato,'! 49 not, in my( judgment, comprehend io when they advise )thecated'ln New York iuse money had in excess of the amount the real question |s] that certain bonds " not b* tf* i - "upon bad received the money and used the* ad ml ni?'ration of 3d thW questtoo now Is of the parties who had' toe collatei the third parties who may have sessiow ?f them by. purchase dnder to ftmd them, for of thoeo propositl ciauy the tatter, there can be no qqessjou iu the minds of those who understand i legal aavd b^iueS? prir.eipl*?, sotwithstandiHg " the unanimous vvoios of. tl)S eensta." , But wfthta? .State redeem the bonds iVom the par- 1 tM1*^ heW the* new^efl^Melf^ wwah ' n what ?bouda of t pledged by the financial agent of the State aa cpUataral security for State loans," Ac. stated that the State woe Indebted to sundry. DereooaL., ^borrowed by the financial, agent at various dates between September, 1871, and October, 1873, This sum wus secured by $1.8^18,300 of State. bonds. The two years and a half interest due on the aniount borrowed would 'aggre^galej at the rat* ot seven-per cent per annum, about $90,000, making a total of about $613,000. Now, tbe real question is, whether it is best to issue about $925,000 of consolidation bonds in lieu of the bouds by pothecated, or to levy a tax now to pay this debt of about $643,000. In conversing with that distinguished financier, Hon. G. A. Treuholm, as to which of those two courses it would be best to pur? sue, be stated that it would be best for the Bute to pay tho dobt it owed by the issue of consolidation bonds, iu lieu of the bonds outstanding, rather than to levy additional taxes upon the people ot presont; or, at any rate, he remarked, that the State did not lose the e quity of redemption by funding them. But downright repudiation, which "the unanimous voice of the senate" attempts, seems to me a violation of one of tho com msndmeuts I 2. The committee regard the funding of coupons that matured on or before July 1, 1811, a fraud upon the State, because, as they affirm, the State waa paying interest on its public debt in gold, "and as there is every reason to believe that the whole of the inter? est due by the State from 1868 to July, 1871, or afte r, was paid previous to October 31,1871, tho committee are compelled to believe that these coupons were not a valid claim against the State, and that, therefore, it was a fraud to fund them." This is tho substance of tbe committee's Itssoos for making so grave a charge as rand against the State?a mere inference that ussauch as the State was paying interest, it wub highly probable that if the coupous were outstanding at that time, they Would have boon j presented for payment, aud paid. I grant the probability of their being presented for payment, but their non-presentation is not presumptive evidence of fraud; there is another and more certain method of proving fraud than relying upon such possibilities or probabilities. &The question of the payment of interest and b legality of outstanding coupous is not a subject of conjecture?it is a matter of positive record in the office of the treasury; and, as I have said in my testimony, I made the subject of tbe interest upon tho public debt a matter of careful 8tudy before I funded any detached coupons. I ascertained that there wero OQupoBji in the treasury as vouchers corre? sponding to the amount of interest recorded as paid. I would here remark incidentally that all coupons, and indeed all vouchers, in my office were canctled before I entered it, as Captain Little testified before the committee. I then saw from the records of the treasury that there was a large amount duo to tho ac? count of the interest on tho public debt. The committee state that they discover, from the reports of the comptroller-general, that the.state treasurer paid $14,384.16 more Interest for the four years, 1868, 1869, 1870, 1811,-than the comptroller-general's estimates called tor. This may or may not be true. I have not taken the trouble to verify it, as it is Immaterial. Tho comptroller-general's esti? mates are not tho proper sources from which the account of interest on the public debt may be ascertained. This account, as well aa all others, is upon the ledgers of the treasurer's and comptroller-general's offices, and appears upon the debtors and creditors statement of the oomptroller-generars and treasurer's so porta, where it will bo seen that instead of tbe account being over-paid $14,384.16, the State really owed, October 31, 1871, the sum of $997,571.05, less $430.324.76, tho amount paid by Mr. KImpton, and accounted for by the treasurer in his account of tho following fiscal year. I present here an account of the interest on the pnblio debt from 1868 to October, 1871: AMOUNT OT IMTKRR8T DUE. Oct. 31, 1868.$ 843,078 13 Oct. 31, 1870. 619,447 60 Oct. 31, 1871.i. 632,261 91 $1,894,787 59 AMOUNT PAID BT N. O. PARKBR. Oct. 31, 1869.$629,269 12 Oct. 31, 1870. 190,879 44 Oct. 31, 1871. 177,067 98?$897,216 64 See comptroller-general's report, 1871-72..... 997,671 05 Amount paid by H. H. KImpton, 1869-'70-*11 . 430,324 75 Interest outstanding to October 31, 1871... $567,246 30 3. The committee dcclaro tho funding of $196,845 of coupons that were out off of bonds* as is alleged, before thoy were hypothe? cated, as a fraud upon the State. v To sustain this charge tho committee state that *? as the report of the special joint com? mittee appointed to 88certain what bonds of UmState isSr? pledged by tho financial agent of the State shows that these bonds wero pledged by the financial agent for State loans after the maturity of these coupons, it is evi? dent that tbeso bonus must have been the property of the State at the time those cou? pons matured. . Of course these coupons must have heen tbe property of the State aa well; and their surrender sod receipt tor tha p*?r pej*of-toAg,and the Issuing1' bfeoosoll. dated bonds or certificates of stock ia the place, was a fraud upon the State.",-. . , tlbera la an important error of feet oootty tetWa^P^Mfe whi<* &?*ry important snVnltd Be pointed out, ao$ we, olueien of the committee then Any Ohe unacquainted with tho facts would naturally in/or tiiat the hypothecation off th bonds referred, to in this report, as taking place. after'the muturlty of these coupooB, was the Thai ia positively incorrect -to my certain knowledge, and has been again: ?nd .sgain .shown to be so. These booas are alleged in that committee's sfport to Hfcve been hypothe? cated in 1S73, and stated so as to appear that this waa their first hypothecation ; whereas the/ were hypothecated for- the Hrst time in ' 18G9, soon after they were authorized to be issued, and doubtless may have been hypothe? cated twenty times between these two pe? riods. The fact of these bonds having been hypothecated tlrst iu 1869 annihilates the conclusions of tho committee. There ia also nn error of law implied, but not expressed, in this part of the committee's report, nnd which waa more fully exhibited by the committco in their examination ot me during the investigation. The committco assume?or, at least, its chairman, Senator Dunn, does?that all cou? pous that mature upon bonds during their hypothecation aud before their sale are tho property of the State, and, therefore, should not bo used in any manner whatever, and should be cot- off whes the bonds sre sold and returned to the Suite. It is a woll-entn Wished legal principle that the parly holding bonds as collateral security havo a right to collect the interest upon them which matures during their hypothecation. "This principle of law," says an eminent authority, " which allows a pledgee to have the benefit of all iutorest or increment accru- I ing upon or from the thing pledged is familiar and unquestionable, and is specially stated in 'Story on Bailments,' section 314, and else? where. The interest accruing on bonds under Hypothecation is a part of tho pledge itself, and is not tbe property of tho pledgor in any I other scnBO than the bonds themselves." Before the committee, therefore, can sus? tain themselves in the position they have taken, it behooves them to show that tho par? ties to whom the bonds were pledged did not exercise this their undoubted right. I 4. The committee declare that tho funding of $6,960 of coupons of conversion bonds, which matured before the bonds were used in ex change, is a fraud upon the State. The committee affirm that these coupous matured January and July, 1871, aud that, "as j these bonds are shown by the records in tho treasury to have been issued at various dates, between November, 1871, and March, 1872, it Is evident that these coupons, which matured I many months before, were the property of the I State at the time of their maturity; and their surrender aud receipt1 for tho purpose of fund- I ing, and the issuing of consolidation bonds in their places, was a fraud upon the State." The term " issuod " refers here, I presume, to the period at which these conversion bonds were permanently exchanged for othor bonds. I It is a matter of fact, to which Mr. Parker snd Captain Littlo will testify, that these bonds I were outstanding prior to that tin e, in accord mice with a custom of Mr. Parker and Mr. Eimpton, in pursuance of tho act of March I 26, 1869 (sen volume 14 Statutes at Large, page 259), enabling the financial agent to hypothecate any securities he may have in hi? possession belonging to tho State. Tho facts connected with this case ore po- I culiar, and I distinctly recollect them. The last time that I ever sealed sny bonds of the State while secretary of state was in I October, 1871. It was then that I first dis? covered that the oonversion bonds were being I used in what I deemed an illegal manner, aud I I positively refused to seal any more. Tho process ot conversion, however, was contin? ued by Mr. Parker, and bo had than to recall I such conversion bonds as Mr. Kimpton could release from hypothecation in Now York, and I use them, when returned to the treasury, for the purposes of conversion. These bonds I were roturnod with tho matured coupons cut off. 5. Tho committee declare that the funding of $9,205 of coupons belonging to bonds lu- I beled??* canceled, unused," is a fraud against tho State. Tho committee do not stato at what time these particular coupons wero funded. If that fuct wero stated, I could more easily verify or disprove this statement. It would consumn u very groat amount of timo for me now to ex- I amino every one of the $8G4,036 of detached coupons which tho eight members of tho committco took two weeks to examine. It would be very easy for them to furnish tho data necessary to prove this statement, as thoy examined the packages of detached cou? pons iu the chronological order iu which they wero put up as vouchers. My object in thus dwelling on tho impor? tance of tho verification of this statement of the funding of the coupons of these particu? lar bonds, while indifferent to tho verification of the assertions upon which tho three pre? vious charges are based, is this: The correct? ness of the statement with regard to tho funding of certain coupons, upon which tho first three charges are made, is a matter, in my judgment, immaterial; and if any such coupous as they say have been funded are not yet funded, I will fund them whenever pre? sented, as directed by law, until the law in that respect bo modified or repealed. But with regard to tho funding of tho coupons of those particular bonds, the circumstances attendiug them are different, and 1 would hesitate, as I have done, to fund them for this reason: Sec? tion 1 of .the act to reduce tho volume of tho public debt recites tho amount and clnu of bonds that shall be funded. Section 2 of said act st?*??.thai the coupon* belonging to the bonds enumerated in section 1 shall also be funded, and these particular bonds, labeled I "canceled, unused," in the treasury, are not included in the amount of bonds of that class 1 .authorized to be funded. It might, therefore, ? very properly be questioned as. to whether the outstanding, coupons of these bonds should be fuoded. If tho letter of the law should bo strictly applied, these coupons ought not to be fuuded; but if tho spirit and ' i 4mi .ioicut of the law were Ukeo into considera? tion (of which I shall jn^grjnor^ ^Hlsr^tTjefo1* would bo no objection to tha i funding of those coupons, inasmuch as tha Spirit and Intent of the law contemplated jtho funding of all outstanding coupons, except the coupons of the conversion bonds declared to be illegal. - It is duo to myself to state rooro fully the circumstances attending the rejection of tbe $1,300 or $1,400 of coupons referred to in this connection by the committee, and which, in the manner referred to, might place mo nt ? disadvantage in the opinion of some. When my attention was called by Captain Little to tho $1,300 or $1,400 of these cou? pons presented for tunding I was surprised, and slated to him that I was not aware that any coupons at all had been cut off those bonds, as I understood tho term "unused" to moan that thoy hod not been used at all by my predecossor, and, therefore, had never boon issued from tho treasury. I then in? quired of him if any coupons of those bonds had previously beeu presentod for fund? ing, and ho assured me that uono had been, aa ho had a list of thorn before him always nnd would hnvp dpicplnrl them. 1 then obtained a list of tho numbers of the . bonds, and gavo instructions to my clerk not to fund any couiioub belonging to them. There are live coupons cut off each particu? lar bond. The bonds amount to $101,000, and are seven per cent, bonda, thus show? ing that $17,075 of coupons havo beon tukcu off. The committee assort that $9,205 of those coupons have been funded into $4.('?02.50 of consolidation bonds. Captain Little assured me, as I havo stated above, that noue of these coupous had boen funded. When that question of fact is sei tied, I stand ready to give to the State one-half 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 viow of the spirit and intent of the law, that I should do so. Tho comptroller-general will doubtless remedy his mistake also, if necessary, by giving his half of tho bonds required. It is a singular fact that, notwithstanding tho comptroller-general is equally responsible with me for the faithful execution of tho law, tho committco visit their censure upon me alone, while he is not referred to in the most distant manner. I still maintain, however, as a matter of justice, that the holders of these coupons bare just as much right to fund them as those who funded other coupous issued in tho same manner. As a question of law. however, it may very properly be questioned. These very $101,000 of bonds, now marked "canceled, unused," in the treasury, wore issued to Mr. Kiiupton in 19G9, and afterwards returned by him in October, 1871. es ray journal shows. The coupons which matured while they wero in use wero doubtless cut off, as was the case with tho coupons of all othor bonds. Tho committco have made a very serious mistake in the numbers of these bonds given by them in their report, and instead of giving $101,000 of bonds, they have given $131,000 The numbers, as my journal shows, are 777 to 818, S'JO to 827, 859 to 905, 983 to 985, and not 829 to 90C?a difference of thirty bonds. If the committee have estimated from 829 to 90G, instead of 859 to 906, in making up tho number of coupons, they have charged mo with tho wrongful funding oftho coupous of thirty bonds, which j would mako a very great difference in their aggregate. "Where is the committee's expert? j 6. 1 am charged with a went of vigilance in the execution of tho "funding law." Tho best reply to this charge, which is | very singular under the circumstances, is to relato briefly the history ol this law, and then ! mention certain facts which tho committee might havo referred to in their report. When 1 became treasurer iu December. 1872, I immediately sought an interview with Governor Moses, and conferred 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, and restore the credit of tho State ; and that if our debts were adjusted and settled in an equitable manner, and the payment of interest on our bonded debt resumed, aud our assessment of property and rate of taxation reduced, and the tux levy made in a specific manner, n cer? tain amount for each particular object or class of objects, and then collected with more care and strictness, mid, above all things, if the disbursement of tho taxes was mado in ac? cordance with tho levy, that is, when the en? tire amount raised from tho levy was dis? bursed, each class of objects should havo re? ceived its proportionate sharo of tho whole? if such n coureo wan pursued, I stated to Governor Moses, I thought tho people would bo satisfied, aud tho State would bo prosper? ous. Governor Moses told mc that ho would leave all such matters to me, and to do just what 1 thought propor. I then went lo New York, and after con? ferring with several distinguished financiers, I adopted tho plan with regard to our bonded debt which hud been pursued by the States of Illinois, Indiana and Michigan, in the earlier part of their history, undor circumstances simi? lar to our own, and which is being seriously considered now by tho States of North Caro? lina and Virginia I then had a most thorough investigation of tbo whole subject of the bonded debt in every respect, made by one who was thoroughly competent to perform the task. Sovon mouths of constant and unremitting labor were spent by us iu the investigation aud study of this subject. The law was then framed by culling those features of tho laws of those States re? ferred to above that wero suitable to our cir cumstanets, and adding such additional fea? tures as would make the law as stioug us pos? sible. I distinctly remember determining upon this ^faaiuaaof ttae f?ftf? mm ouBM<i)Cfl rtl'WPnrytt'-yoT the act with regard to the funding of the in? terest upon the debt. I Knew from the man? ner in whiqhour bonds had bean hypothecated io New York, it would probably be difficult to trace the ooupona belonging to them in every instance. I, therefore, decided that it would be better for the welfare of the Slate, and the restora? tion of our credit, by the resumption of the payment of the interest which hsd been sus? pended for several years, to include the inter? est outstanding, and it ia so included io sec? tion 2 of the act in distinct and emphatic terms. When the legislature was considering this section of the act, thut was tho proper time to I examine this subject. But the general assem? bly then wisely concluded that it was far bet? ter to settle the whole general subject than I to be wasting the timo on comparatively trifling features of it, especially as they compelled the holders, just on account of such irregularity, as well as the inability of State, ' through the misfortunes of the wer, and the extravagances subsequent thereto, to take bonds ee.ua] to one-half only of tho*e the*1 sur- I I rendered. 1 Tho law has elicited from the Charleston I News and Courier this compliment, that it was I framed by ihe ablest lawyers and most dis I tiuguished financiers of the Stato. Tho editors did not, perhaps, know who were the 1 I real authors of the law, and to whom, there I fore, this compliment was justly applicable. I I It was appreciated, however, all tho same. I The bill was then introduced in the legisla I lure, and'its passage carefully watched and I urged with all the power and influence which I I my position us treasurer gave me. It was passed by the legislature subatan- I I tially as prepared on December 22, 1873. I And now I began to experieuce tho effect of ono of those mistaken viows of economy I I practiced by the legislature. I had asked the I I general assembly for an appropriation of $10,000 to have plates engraved and bonds I I and stocks printed, the records necessary for I such elaborate transactions, tho additional 1 I clerical force necessary for the careful execu- I I tion of the law, and making the proper adver- I tisements to the bond holders, scattered all over the country. The general assembly appropriated just one- I I half ot the amount that my most careful esti- I I mates called for, although tho execution of I I this law will save the State $13,000,000, by tho reducing the volume of the public dobt from twelve to six millions of dolars, and saving the State twenty years' interest at six per cent, upon that amount of principal. Tho consequence was, that after having the I I plates for the bonds engraved and tbo bondB printed, and obtaining the necessary records I and stationery, and making auch advertise- I I ments as were absolutely essential to com mence the execution of the law, I had no 1 money left to employ the onlygSio who was thoroughly prepared, by fourteen months of I I study of this subject, to act as olerk, and I, therefore, lost his valuable services. I then spent sevoral months, with the in- I I valuable aid of my book-keeper, in devising I a system for tho execution of tho law, and the preparation of a plan of records for the I I transactions, and selecting the style and class of I I bouds aud slocks. It was Juuo 1,1874, eigh- I teen months after I entered my office, and began I I carefully to study the subject before I was I I prepared to enter upon the actual work of I I funding. I I then had to depute my chief clerk, who I I had not givon special attention to thia sub- I I joct, to perform the work of funding, in addi- I I tiou io all his other duties, and it has only I I been by most earnest and unremitting vigi- I I lance that no more mistakes havo occurred I I under the circumstances than tho,probable one which I have acknowledged. This loads me to mention certain facts I I which the committee might have referred to in their report, as an act of simple justice to I me and my assistant. I They examined $864,03(5 of detached cou? pons, put up in fifty or sixty different packages as vouchers, and hundreds of thousands of bonds, und compared them with tho trnnsoc lions as recorded in the books, and found I I them in every single case to bo perfectly cor- I roct. But, more than this, the law positively for- I bids tho funding of $5,905,000 of the con vor- I sion bonds and the coupons belonging thereto, while it requires $1,577,500 of the same class of bouds aud coupons to bo funded. Theso I bonds and coupons wero distinguishable by I their numbers aud tho color of their nun - hers. Sonator Dunn, the chairman of the joint committee, watched for tho bonds and cou- I pons of the bonds that wore prohibited by law from being funded with all the vigilance that a sloeploss malice can inspire, and, to his evident chagrin and mortification, did not dis cover a single one. I do not think that it is necessary for me to say anything more in I reply to tho charge of tho want of vigilance from a committee who made a hasty and su- I perflciol examination of three hours a day for two weeks of a most difficult and complicated subject, which they acknowledged, when they entered my office, they knew little about. I have watched over the execution of this 1 law with the utmost caro, and cballonge the I most rigid scrutiny of any one or all in the State or out of it who aro competent to make I an investigation. I It will be aeon by referwaee to ray annual t report for the fiscal year ending October 31, 1374, that tho interest fund bad a balance to iU credit of $105,481.87. Now, pormit me to relate an occurrence which, if it hsd been otherwise, would havo been a roul diversion of the interest fuud The board, composed of the governor, comptroller-general, treasurer, chairman com? mittee of finance and chairman committee on i , ways and menus, who were authorized in the I I "act to reduce the volume of the public debt'? ' l apply a 8UrP^H-r^^ii|<w j> |h* trafginry, ^ JSiWTffe"*pay"^^ xilagoiBbmaiH ?f tbe poWio deb^'add f?oo other purp^o^ah^'j* *^jr^?i*>l- . ao.ce last fall to> the pu rchasa of hoods. , I., objected, ataUpg.lUat tbat would be a diversion of tho fund, as the phrase, after tho pay men; of the said imerest,'** nieant all the interest- that would be duo after all the bonds were exchanged that could be, ex? changed ^ for. if an/ other conMruotwa w?t? put upon these words, the funding law would be utterly destroyed, inasmuch as the interest ou tho old bonds to January 1, 1874, only were authorized to bo funded, and I would have no money on hand to pay the interest July 1, 1874, on the consolidation bonds, and thero would then be no inducement to make tho exchange. The board was very much disappointed at this construction, but the hi* tcrest fund was not diverted. as TO the funds FOB tob l'avmbbt 07 IM tob? est. ? i 7. The inquiry upon this point which tbeooav milteee was authorized to make is, "whether tho funds for the payment of interest raised uuder the said act have been kept separate aud apart from all other funds, as provided for in tho said act, and as otherwise provided by law. . -rVjr- ",-; Tho conclusions of the committee upon this point are presented in their report with great emphasis aud confidence. They declared thai "these funds have not been kept separate.and apart from all other funds, as was required by law." 1 take issue with tbe committee upon this conclusion, and I assort, with equal ecn-i phasis and confidence, that I have never for ono momont or in one insUnco violated soy law in my management of any fund * of tbe) State. . .; .', ?*. < The committee are very liberal in boM statements, unsupported by proof' Or argu? ments, but there is a plentiful Ibck of snob r > '' reasoning or principles of law as would better ~* have become a report which bears- the signs* tore of at least one gentleman who may be regarded aa qualified by his ability and p>0 fossioa to discuss the questions involyedv- t, do not proposo to follow tho f"P"pr^? <4 the\, committee; on tho contrary, I intend to show that from some causes?whether malice, igno? rance, or inadvertence is now immaterial? they have now arraigned me before tho pub? lic upon a false and unfounded charga in re? spect to tbe matter now under nnnajrliraiiBB) The committee contout themselves w*th ?t* ?n-? thedra announcements that my conduct .is a "dagrant violation of the law;" that my con? st ruction of the law is "ss monstrous as the' violation itself;" that my reasoning is m. _ ' bold assertion," and my acLion is "toderine the contract made by the State with tho holders of the bonds." It may be becoming and competent for this very learned commit- . teo to announce conclusions without deigning to point out any grounds for such conclusion*, ?>? but I shall claim no such privilege, and shall feel it incumbent, upon me to set forth* tbe grounds upon which I confidently claim that my conduct has been at all points and timaa ... in strict accordance with law. Tho first provision of law which bears opoo the present question is found in the ninth see- ; tion of tho supply act of December 12, t$*tj-?T (acta of 1873-7*. page 616), and ia Yn &??**' words: "That tbe proceeds from Jbe taxea levied in the first seven sections of this, i shall be kept by the state treasure" and apart from each other and from other pub r lie funds, and shall be applied to the purpose* for which they are respectively levied and. none other.". ' , The same section re-appears in the supply , act of March 14, 1874 (acts 1873-74, paga . 659). ' The next provision of law that bears oq this question is found in the seventh section ' of tho " act to reduce volume of,public debt, "^ &&, passed December 22, 1873 (actsof 1873 74, paore 521), which provides "that the fund* ' so created shall be kept separate and apart i ? from all other funds, and shall be applied," first, to payment of the annually accruing In? terest upon the bonds and certificates of stock "("j { 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, find to no other purpose." These are the provisions of law which reg ulate my duty in the premises, and the sim? ple quc3tiou is, what do they require of me as ~ - treasurer? What is meant by the word* " separate and apart from other funds',* and "shall be applied to no other purpose?" There are two rules of construction which are applicable to the construction of statutes? ? the odc, which may be called tbe literal, and tho other, which may be culled tho reasonable. , j In some cases the literal construction may be the only admissible one, and in other Case* It may bo equally apparent that the word* of ? statutes were not intended to be used in their , literal sense. This- latter view has' pasaae". into a familiar maxim of the law: u Qui hacretin Utera, Kaertt Sn cortice." " Be who clings to the letter clings to the bark." But the ono great canon of construction which prevails on all occasions ia the spirit and intent of tho law. Indeed under' this broad rule are included other principles of construction, which express tho wisdom of centuries of jurisprudence, such as, that a statute must, always receive a reasonable construction ; that such a tion shall be adopted as wfll eomplafned or, and j Btructions, tb< beet'pr Let oa' quoted from us to adopt uiflcant words' 'i and apart from all other fu would a literal compliance with* require? It would plainly require| material, tangible Wbpihtion of the State into several visible m?