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The Orangeburg news. [volume] (Orangeburg, S.C.) 1867-1875, October 21, 1873, Supplement to the Orangeburg News, Image 6

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

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