F 266 .C378 no. 1-6 THE PUBLIC DEBT OF SOUTH CAROLINA. [REPRINTED FROM THE NEWS AND COURIER.] CHARLESTON, S. C. THE NEWS AND COURIER BOOK AND JOB PRESSES. 1878. Digitized by the Internet Archive in 2015 / https://archive.org/details/publicdebtofsout01unse THE PUBLIC DEBT. AN INTRICATE AND IMPORTANT QUESTION. [From The News and Courier, January 3, 1878.] It is unfortunate, in some respects, that ] it should have been considered necessary by the General Assembly to undertake an examination of the character of the State dsbt. As, however, the investigation was ordered, it could not be made too thor- ough, and no fault is to be found with the Bond Commission, for the laborious care with which they have scrutinized every branch of an intricate and a difficult sub- ject. The expectation is that the report of the Commission will be presented upon the reassembling of the Legislature after the holidays, and a better time is not likely to be found for recalling to the public mind considerations and facts which may have been overlooked or forgotten. This is requisite to intelligent action upon the report, action which is expected to be final and conclusive. The debates in legislative bodies rarely throw full and clear light upon questions involving both interest and sentiment, and with little opportunity, in the hurry of business, to weigh assertions and analyze reasoning, the disposition is to agree to the readiest and simplest solution that is of- fered. There is the more danger of this when, as in the present instance, the dis- favor with which the legislation of the past eight years is justly regarded ob- scures the merits of the matter to be dealt with, and clouds the vision of those who are usually clear-sighted and impartial. It seems to us, therefore, that we shall do the public a service, if we place before them a statement of the origin, rise and condition of the public debt of South Car- olina, covering circumstances and details that are not within the scope of the work of the Bond Commission, and are, never- theless, indispensable to a thorough com- prehension of the different propositions that will be submitted to the Legislature with the Commission's report, or in con- flict with its recommendations. There is evidently little exact informa- tion concerning the public debt in posses- sion of the public. Small confidence was reposed in the financial statements pub- lished by the former State officers, 'for, at different times, these reports had been shown to be misleading or untrue. The venality of the State Government, in what was known, filled the public mind with the idea that the unknown was rotten to the core. In their pardon- able desire to arouse the public, the Demo- cratic orators and party newspapers were not always precise in their statements. A few millions more or less make little dif- ference in the heat of a political canvass. There is no doubt a prevalent idea, not confined to non-officeholders, that the State debt mounts up to fifteen or twenty millions, and is, as a whole, the embodi- ment of Republican extravagance and fraud — the legacy bequeathed to an im- 4 poverislied people by audacious and un- scrupulous rulers. This is only one of the many misapprehensions. . Under ordinary circumstances we might safely trust to time for the correction of error and the dissemination of truth. But we regard the debt question as one of paramount im- portance, not so much to the public cred- itor as to the people of South Carolina. For this reason we shall lay before the public,' as briefly as we can, the history of the Public debt from the beginning. Starting with the debt as it stood at the time that Governor Orr went out of office, we will show the whole amount of the debt in 1888, in 1873, and in 1877, and the opera- tion of the Consolidation Act as affecting the amount and character of the debt. Having shown, the objects and effects of the Consolidation Act, we will consider the relative advantages of other modes of ad- justment; such as (1) casting out the Re- publican bonds, representing debts con- tracted by the Republicans, and recogni- zing the whole of the bonds, and other lia- bilities, outstanding when the Republi- cans came into office; (2) recognizing the old bonds as before, and recognizing the Republican bonds to the extent of the money actually received for them, by or for account of the State; (3) recognizing the Consolidation bonds and stocks repre- senting the Old debt, rejecting all other post-reconstruction bonds and stocks, and completing the funding of the Old debt exclusively under the Consolidation Act. We shall then see whether, as a matter of money, it is to the interest of the people to reopen the settlement under the Consolidation Act. In this connection we shall examine the action of the Tax- payers' Convention of 1871, note the dif- ference between the debt then recognized and the debt included in the terms of the Consolidation Act, and examine the nature of the solemn warning then given, in the name of the taxpayers, to holders and purchasers of State boncjs. Reviewing the political campaigns of 1874 and 1876, and the subsequent action of the House of Representatives, we shall see the extent to . which the settlement of the debt, under the Consolidation Act, was agreed to by the people. This done, the people' can judge for themselves whether it is to their interest to reopen the Consolidation Act, and whether, in honor, they can do so. We shall next consider whether the State has the power, if it have the will and moral right, to reject any of the Con- solidation bonds. We shall next inquire whether the people can afford to attach to themselves the stain of compulsory read- justment or repudiation, even if in morals it be defensible, and in law it can be main- tained. Lastly, we shall, if practicable, show what frauds and irregularities, in the issue of State bonds, have been revealed from time to time, giving the explanations of those concerned, and describing the effect of subsequent popular action and decisions in the Courts. This, we think, will cover the whole ground.. We shall, in every case, give authority for the statements we make, in order that the public may examine them for them- I selves, and our hope is that we shall be able to lay a solid foundation of fact upon which the General Assembly and the pub- lic can safely stand. In this undertaking, we have no other purpose than to save the Democratic party from dangerous and mischievous action, and the State from ills without number that must follow any determination of the Bond problem that is not consistent, reasonable and just. ITS AMOUNT IN 1868, 1873 AND 1876. [From The News axd Courier, January 4, 1878.] In considering the character and vol- ume of the public debt of South: Carolina, , there is, fortunately, no difficulty in find- j ing a safe point of departure. The first i essential is to ascertain what, if any, is : the indisputable debt of the State, un- questioned and unquestionable. \Yhat- ever the divergence of opinion as to the debt contracted at a later period, there is no difference of view as to the binding nature of the public indebtedness existing at the time that Governor Orr was super- j seded by Governor Scott, No Bepubli- can has sought to go behind this indebt- edness, and no Democrat has denied that the taxpayers contracted it and are re- sponsible for it. "With this indebtedness, therefore, the State starts. There is no 1 difficulty in ascertaining the amount, as the statements of the outgoing officers, in 18G8, were accepted and are confirmed by their successors. The Legislature elected under the Be- — ^„,^„ . construction Constitution assembled^ in j interest to October 1, 1S6S 434,791 52 Columbia on July 6, 1868, and on the f ol- '; i lowing day the message of Governor Orr i Debt October 31, 1S68 §5.842,097 79 was read. In the message he says that on Besides the Old funded debt and interest October 1, 1867, the funded debt was up to October 1, 1868, the Ante-Recon- 85,407,213, and the interest due and un- struction government is chargeable with paid was $116,861, making the entire debt I the amount of Bills Eeceivable outstand- 85,5.23,576. This is exclusive of bonds j ing when the Scott government was in- and stocks issued between 1860 and 1865 stalled. The Act of December, 1865, for military purposes, amounting, with the |j gave authority to issue $500,000 of Bills interest, to $2,854,679. By Article XIV || Eeceivable ; but Governor Orr, in hismes- of the Constitution all such debts "incurred ij sage of July, 1868, says that it had not "in aid of insurrection or rebellion'" are been found necessary to print more- than declared "illegal and void." TVe cannot jj $300,000 of the bills, and that only fix the amount of interest on the public jj $220,000 had been actually issued. Even debt due in Julv, 1868, w;hen Governor j this lesser amount was not outstanding in Orr went out of office, as the reports i| July, 1868. According to Governor Orr, covered by his message come down only jj the amount of Bills Eeceivable outstand- as late as October, 1867. On October 31, 1868, three months after the Republican officers took the reins, the principal of the debt (E. and E., 1868-69, page 26) was $5,407,306, (agreeing within a few dollars with the amount reported by' Governor Orr,) and the interest overdue and unpaid was $434,791. The total funded debt and interest was -$5,842,097. This is the Old debt, as it is called, existing in the form of bonds and stocks, running down from the 3 per cent, stock issued in 1794 in payment of "Revolutionary "War claims" to the State-House bonds of 1866. The several amounts are as follows: Three per cent, stock $ ' 38,836 60 Fire Loan stock, 314,453 89 New State -House stock 1,775,000 00 Funded debt 1,282,971 27 Fire Loan bonds 484,444 51* Blue Ridge Railroad 1,000,000 CO New State-House bonds 511,600 00 Old funded rtaht... : 407 RC)A 07 6 ing on May 1, 1868, was $135,687. In his message of November 27, 1868, Governor Scott reports that the amount of these bills then outstanding was $160,000. This is, as nearly as can be ascertained, the amount for which the Orr government is responsible. The whole $300,000 of bills that had been printed were at some later day in circulation. Governor Orr had signed $322,000, and Governor Scott signed the remaining $78,000, and used them as collateral security for a State loan. By the Act of August, 1868, the Governor was authorized to borrow not exceeding $500,000 to redeem the Bills Receivable. Only $300,000 had been printed, and the Special Joint Committee, appointed in 1874, report (R. and R., 1874-75, page 727) that only $298,702 of the bills were redeemed. There was still another unfunded debt of the Ante-Reconstruction government, viz : the bills of the Bank of the State. Governor Orr was confident that the State could not be held liable for these bills. The Supreme Court of the United States has made the State liable, in decid- ing that these bills are receivable for taxes. This liability existed, therefore, at the time that the Republicans obtained possession of the Government. They did not await the action of the Supreme Court, but in 1868 authorized the funding of the bills, with interest, in State bonds at par. Treasurer Parker under date of May 24, 1869, reported (R. and R. 1869-70, page 82) that the amount of bills received for funding was $1,194,392, and the inter- est $65,742, making a total of $1,260,134. Messrs. Rainey, Bosemon and Crews, un- der date October 16, 1869, reported that they had received, examined and de- stroyed bills to the amount of $1,194,392. This was not an extravagant amount, as Mr. Furman reported to the Legislature in 1868 that the amount then outstand- ing of such bills as were afterwards funded was $1,422,956. Whether the Legislative committee, in 1869, did or did not effectually destroy the funded bills does not affect the present question. We can now show the Old or Ante- Reconstruction funded and unfunded debt: 1. Bonds and stocks $5,407,306 2. Interest to October 31, 1868. . 434,791 3. Bills receivable 160,000 4. Bills of Bank of State and in- terest 1,260,134 Old debt $7,262,231 This xwas the clear, indisputable debt of the State, already incurred when the Re- publicans, under the Reconstruction Con- stitution, came into office. It is a debt for which the people were responsible, and which they would have had to meet if the Government had remained in the hands of the white citizens. Republican profusion and misrule have no lot or part in it, except so far as the Democrats could, and would, have made better terms, with the holders of the bills of the Bank of the State, than the Republicans found it advantageous to themselves to propose. The public debt soon began to increase With startling rapidity. In the different years the total debt, as reported to the General Assembly, was as follows : October 31, 1869 $ 6,667,793 October 31, 1870 7,665,908 October 31, 1871 15,851,327 October 31, 1872. 15,851,327 October 31, 1873 15,851,627 The high-water mark was reached in 1873. Although the largest increase, over eight million dollars, is between October 31, 1870, and October 31, 1871, a large part of the bonds first reported at the latter day were undoubtedly in use, as collateral security for State loans and otherwise, when the mendacious report of October 31, 1870, was published. This was discovered by the Committees ap- pointed by the Taxpayers' Convention of 1871. The debt as reported on October 7 31, 1873, was composed of the following issues of stocks and bonds : Old stock $1,374,782 84 Old bonds 2,676,744 51 $4,051,527 35 Bills Receivable bonds, Act August 26, 1868 484,000 00 Funding Bank bills, bonds, Act September 15, 1868 1,189,600 00 Interest Public Debt bonds, Act August 26, 1868 1,197,000 00 Relief of Treasury bonds., Act February 17, 1869 856,000 00 Conversion bonds, Act March 23, 1869 7,542,500 00 j Conversion stock, Act March 23, 1869 64,000 00 Land Commission bonds, Acts March 27, 1869, and March 1, 1870 487,000 00 Debt October 31, 1873.. $15,851,627 35 The amounts of bonds and stocks re ported under each head, in the foregoing statement, are not necessarily the entire amount issued under the several Acts of Assembly. For example, the whole amount of Land Commission bonds issued under the Acts of March 27, 1809, and March 1, 1870, was $700,000, but only $467,000 of these bonds were in existence in October, 1873, the remainder having.been converted j into Conversion bonds or stocks under the fruitful Act of March 23, 1869. The Consolidation Act went into opera- tion on December 22, 1873, the clay on which it was approved. And on Octo- ber 31, 1876, the public debt was as fol- lows : 1. Old bonds and stocks, Acts 1794-1S68 $1,840,243 ! 2. Reconstruction bonds and stocks, Acts 1868-1870 935,250 3. Consolidation bonds and stocks, Act December 22, 1873 4,338,757 Debt October 31, 1876 $7,114,250 This was the debt at the time that the present State Government was elected. There is an error of $5,000 in the addi- tion ($7,109,250) given in the Comptrol- ler's report, dated October 31, 1876. The public debt of the State on March 31, 1877, when the funding under the Con- solidation Act was suspended, is given by Treasurer Leaphart (R. and R. 1877-78) as follows: 1. Old bonds and stocks, Acts 1794-1S66 $1,828,001 54 2. Reconstruction bonds and stocks, Acts 1883-1870 876,550 00 3. Consolidation bonds and stocks, Act December 22, 1873 4,396,290 44 Debt March 31, 1877 $7,100,841 98 The debt, in both 1876 and 1871, con- sisted, it will be seen, of three general classes : 1, the Old bonds and stocks whicn had not been converted under the Consolidation Act; 2, the Reconstruc- tion bonds and stocks which had not been so converted; 3, the Con- solidation bonds and stocks, issued at the rate of fifty cents on the dol- lar for the bonds and stocks, and interest thereon, authorized to be so consolidated by the Act of December 22, 1873. The consolidation of the debt was not com- plete. What was* the operation of the Consolidation Act will be more particu- larly explained hereafter. ORIGIN, TERMS, AND OPERATION OF THE CONSOLIDATION ACT. [From The News and Courier, January 5, 1878.] We have already shown the amount of the unquestioned and unquestionable pub- lic debt of the State, and the amount of the funded debt at successive periods and at the present time. The salient facts are that the Old debt (funded and unfunded) which was $7,262,231 on October 31, 1868, rose to a funded debt of $15,851,627 on October 31, 1873, and, under the ope- ration of the Consolidation Act of Decem- ber 22, 1873, had declined on March 31, 1877, to $7,100,841. We have now to consider the nature and general terms of the Consolidation Act, and to show what the debt will be if the funding under that Act be completed, In 1873 there was a financial dead-lock in South Carolina. No interest on the public debt had been paid since July, 1871. There was no use in levying a tax sufficient to pay an annual interest charge of about a million dollars, for the people had already been taxed to the last extremity, and could pay no more. Nor would they have paid the tax if they could. The High Joint Committee had submitted its report, charging that vast frauds had been committed and that there had been enormous over-issues of State bonds. During the State canvass, in the previous year, when Tomlinson ran against Moses, the dark deeds of the Re- publicans had been ruthlessly exposed, the chief assailant of Messrs. Chamberlain and Moses being no less a person than Mr. D. T. Corbin. The people were in no humor to stand fresh exactions, and the State officers felt that it was a para- mount necessity to get rid, by hook or by crook, of the flagrantly fraudulent debt, and to put the remainder in a shape that would be, in some respects, satisfactory to both the bondholder and the public. To the latter was offered, as a tempting bait, a reduction of the debt to about two- fifths of its amount ; and to the forrner was presented a hedged-in and fenced- about security which should, at once, commaud a high price, and so compen- sate the holder for the loss of one-half of the principal of the debt. The Consolida- tion Act was framed, and on December 22, 1873, became a law. Briefly stated, the provisions of the Consolidation Act are that the State Trea surer shall issue, to the holders of the bonds and stocks described in the Act, Consolidation bonds or stock to the amount of fifty per cent, of the face value of such bonds or stocks, with the in- terest thereon, up to January, 1874; that no interest shall be paid on the bonds and stocks described in the Act, so long as they remain unconsolidated; that the Con- solidation bonds and stocks issued under the Act "shall bear upon their face the "declaration that the payment of the bi- tterest and the redemption of the prin- cipal is secured by the Jevy of an annual "tax of two mills upon the dollar upon "the entire taxable property of the State; "which declaration shall be considered a "contract entered into between the State "and every holder of said bonds and "stock;" that the coupons and interest cer- tificates of the Consolidation bonds and stock "shall be received in payment of all "taxes due the State during the year in 9 " which they mature, except for tax levied "for the public schools;" that it shall he a felony for any officer of the State to ne- glect or refuse to perform any duty de- volved upon him under the provisions of the Act. The Act, it must he remem- bered, was probably drawn with an eye to the terms of the decision of the Supreme Court in the case of Morton, Bliss & Co. This decision indicated modes "whereby a public creditor could be placed in a posi- tion to enforce his claims against the State. As shown in a previous article the pub- lic debt on October 31, 1873, was: Old stock $1,374,782 84 Old bonds 2,676,744 51 $4,051, 527 35 Bills Receivable bonds, Act August 26, 1868 481,000 00 Funding Bank bills bonds, Act September 15, 1S6S 1,189,600 00 Interest Public Debt bonds, Act August 26, 1S6S. ....... 1.197.000 00 Relief of Treasury bonds, Act -February 17, 1S69 856,000,00 Conversion bonds, Act March .23, 1869 7.542,500 00 Conversion stock, Act March 23, 1869 64,000 00 Land Commission bonds, Acts March 27, 1869, and March 1, 1S70 467,000 00 Debt October 31, 1873. . .$15,551,627 35 The bonds and stocks for which f: the faith, credit and funds of the State" are pledged by the Consolidation Act are as follows : 1. Bevolutionary Vv"ar claims stock, Act of 1794 .$ 33,836 60 Charleston Fire Loan stock, Act June 1, 1838.. 303,343 89 Charleston Fire Loan bonds, Act June 1, 1S3S 481,944 51 Xew State-House stock, Acts 1856, '57, '58, : 59, '61 and -63 ' 953, 1SS 41 New State-House bonds, Acts 1853, '54 and '66. , * 298,600 00 Funding Public Debt stock, Acts September and December, 1866 79,413 94 Funding Public Debt bonds, Acts September and December, 1866 930,200 00 Blue Pddge Railroad bonds, Act December 1854 966,000 00 Old bonds and stocks. .:. 64.051, 527 35 2. Bills Receivable bonds, Act August 26, 1868 484,000 00 Funding Bank bills bonds, Act September 15, 1S6S 1,189,600 00 Interest Public Debt bonds, Act August 26, 1868 1,197,000 00 Belief of Treasury bonds, Act February 17. 1869 856,000 00 Conversion bonds, Act March 23, 1S69 1.577,500 00 Conversion stock, Act March 23, 1869 64,000 00 Land Commission bonds, Acts March 27, 1889, and March 1, 1S70 '. . 467,000 00 Reconstruction bonds and stocks $5,835,100 00 ( Adding the two classes of debt together, we have, as the debt fundable under the Consolidation Act : Old bonds and stocks $4,051,527 Reconstruction do 5.835,100 Debt to be funded $9,886,627 Debt October 31, 1873 15,851,627 Repudiated in Consolidation Act . .'$5,965,000 The bonds repudiated, amounting to So, 965, 000, are Conversion bonds. In March, 1869, the General Assembly passed an Act to provide for the conversion of State securities. This Act authorizes the issue of State bonds in lieu of State stock, and of State stock in lieu of State bonds. The single and evident purpose of the Act was to allow of the conversion of one kind of security into another. There was ; the incidental advantage that the bonds I o and stocks issued under the Conversion Act would be of uniform tenor and date, and, as a well-understood security, would be regularly dealt in, and so have an in- creased market value. It was established, however, by the investigations which took place in 1871 and 1872, that Conversion bonds, to a large amount, had been issued for which no equivalent stocks or bonds had been turned in. These Conversion bonds, instead of representing an equal amount of other funded indebtedness of the State, represented only the necessities and rapa- city of the State officers who put them on the market. The Conversion bonds had really been regarded as choice securities, and there are to-day, in different parts of the Union, scores of persons who are pinched in means, if not reduced to beg- gary, by reason of the loss sustained by purchasing these bonds, at prices ranging as high as 75 and 80. "Whatever the wrong so done the purchasers, who had no means of knowing that the bonds were improperly issued, there is no manner of doubt that such bonds were put forth without any authority of law. The Re- pubiican officers in South Carolina, ready always to profit by their own wrong, re- pudiated these bonds. In the language of the Consolidation Act : "The bonds known "as the Conversion bonds, amounting to "$5,965,000, and which were put upon the ' 'market without any authority of law, be, "and the same are hereby, declared to be "absolutely null and void." No steps have been taken, so far as we know, to hold to account the State officers (Governor Scott, Attorney-General Chamberlain and the rest) by whom these bonds were issued. The loss has fallen on the unsuspecting purchasers of bonds which were, in their eyes, as unquestionably good and genuine as if they had borne on their face the names of Hampton and Hagood. It will be noted that the Consolidation Act recognizes a million and a half of Conversion bonds. These bonds, like the Conversion stock likewise recognized, were issued properly, under the law, in exchange for an equal amount of bonds and stocks of the State. The Conversion bonds repudiated by the Act of Decem- ber 22, 1873, when the Republicans had a two-thirds majority in both branches of the General Assembly, comprise the whole amount of Conversion bonds placed at any time, and in any way, in the hands of the Financial Agent, H. II. Kimpton. Their repudiation excised the ulcer of fraud from the State debt. The same agencies wrought the disease and worked the cure. The whole amount of bonds and stocks authorized to be funded under the Con- solidation Act was $9,886,627. The esti- mate of the former State Treasurer was (R. and R. 1876-77, p. 4) that when the funding under the Act was completed "the entire valid debt of the State will be "$6,183,759." This, however, is an over- estimate. Both the interest, to January 1, 1874, and the principal of the bonds and stocks recognized by the Consolida- tion Act were required to be funded; but Treasurer Leaphart in his report (R. and R., 1877-78, p. 4) shows that the interest on the repudiated Conversion bonds "has "never been eliminated from the general "interest account," and he estimates that "the outstanding interest convertible into "Consolidation bonds and stocks may be ' 'reduced to an amount less than $500, 000. " This enables us to determine, more accu- rately than before his report was pub- lished, the final result under the Consoli- dation Act. We have shown that on March 31, 1877, the debt was : Consolidation bonds and stock. . . .$4,396,290 Unconsolidated 2,704,551 Total debt $7,100,841 The unconsolidated debt, and the $500,- 000 of interest mentioned by Treasurer Leaphart, remain to be funded at 50 cents on the dollar, and when the funding is 1 I completed the debt will, therefore, stand : Already consolidated $4,396,290 To be consolidated: Principal $2,704,551 Interest 500,000 $3,204,551 At 50 cents 1,602,275 Whole debt $5,998,565 With the amount of the debt under this settlement we compare the amount of the unquestionable Old debt, which was $7,262,231. And we compare with it the amount of the debt on October 31, 1873, which was $15,851,627. It is only proper to add, in this place, that we opposed the Consolidation Act, up to the time of its passage, for the rea- son that we considered it grossly unjust to place the Old debt, for which the State had received dollar for dollar in gold, on the same footing as the Reconstruction debt, which represented large payments, perhaps, by the bondholders, but nothing or next to nothing in the way of beneficial value received by the State. Since the Act was passed we have treated the settle- ! ment of the debt, thereby to be effected, I as absolutely final. •J DIFFERENT MODES OF RE-ADJUSTMENT. [From The News and Courier, January 7, 1878.] It must be presumed that the present General Assembly desires to effect a per- manent settlement of the public debt. With- out the consent of the people, given at a general election, the public debt cannot, in any way, be increased, and, so soon as the present discussions and investigations are at an end, a favorable change in the financial situation may be expected, pro- vided always that the action of the Gen- eral Assembly confirm confidence in the fidelity of the people to their obligations. There is no room to doubt that the out- standing 6 per cent, bonds can, as they become due, be redeemed by the substitu- tion of other bonds, bearing a lower rate of interest. What the United States is doing, the States, under similar condi- tions, may hope to accomplish. Absolute justice to the creditors of South Carolina, it may be, is incompati- ble with a small debt. The persons who bought Conversion bonds at the Financial Agency in New York prior to the start- ling revelations made in 1871 had no sus- picion, and could not have had, that they were giving their money for bonds fraud- ulently issued. The law authorized the issue of Conversion bonds, and the Con- version bonds they bought were regularly signed, countersigned and sealed. The criminals, the persons who should have been made to suffer, were the State offi- cers who sent the bonds to New York, who attached their names to them, who were aware of, and who authorized, the uses to be made of them. The purchasers of the bonds had no finger in the rascally work. Nevertheless the Republican Legislature of 1873 repu- diated the whole of the improperly issued Conversion bonds. Nothing effective was said or done against the Kimptons, Par- kers, Scotts and Chamberlains. The Re- publicans chuckled at their own smart- ness, in issuing nearly six million dollars of bonds without authority of law, and then rejecting those bonds because they were illegally issued. With the repudia- tion, as with the issue of the bonds, the taxpayers, the Democracy, had nothing to do. They found the public debt, when they came into power, in process of reduc- tion to less than six million dollars. At one blow the Republicans, unmindful of the unfortunate holders, had repudiated a mass of bonds for which the State officers had received large sums of money. The Republicans alone are responsible for the cruel remedy, as for the shameful disease. Only for the gravest reasons could the General Assembly consent to reopen the settlement, under the Consolidation Act, and seek a readjustment. It is claimed, in some quarters, that the Consolidation Act is injurious to the bondholders and unjust to the State. The question for the General Assembly to de- mine is, whether the State can make any other approximately equitable settlement equally beneficial to the State, and whether the State can afford to make any settlement more advantageous to the bondholders, past and present. We think it can be demonstrated that the settlement under the Consolidation Act is the easiest and most beneficial that can be made, short of wholesale and undisguised repudiation. I. The first of the proposed plans of re- adjustment involves casting out the Re- publican bonds, representing debts con- tracted by the Republicans, and recog- 13 nizing the whole of the bonds and other liabilities outstanding when the Republi- cans came into office. This mode is fairly summed up by the Winnsboro' News as follows : 1. The honest debt of the State should be paid dollar for dollar. 2. The fraudulent debt of the State should be repudiated dollar for dollar. In order to give the supporters of this mode every advantage, we will assume, for the sake of argument, that all the bonds representing debts contracted since 1868 are ••fraudulent."* There is no diffi- culty in determining what is "the honest "debt of the State.'* in the sense in which these words are commonly used. It is the debt, funded and unfunded, existing when Governor Orr went out of office. This debt is to be paid ''dollar for dollar." It is as follows : 1. Bonds and stocks $5,407,306 2. Interest to October 31, 1868. . . 434,791 3. Bills Receivable 160,000 4. Bills of Bank of State 1,260,134 Honest debt §7,262,231 Of these bonds and stocks, $1,828,001 remain unconsolidated, and $3,579,305 have been consolidated. To be just, the State must pay the persons who funded their bonds what they have lost by so funding. They shall get "dollar for dol- "lar" of principal, and are entitled to in- terest at six per cent, on the half of the principal they sacrificed under the Consol- idation Act, on which sacrificed half of the principal they have had no interest. They received Consolidation bonds for one half the amount of principal and interest, due and over due, to January 1, 1874, and have received the interest, or possess the coupons for the interest, on that half. In justice, therefore, they should be allowed five years' interest, at 6 per cent., on an amount equal to the amount of Consoli- dation bonds, representing Old bonds, now outstanding. This amount is at least two million dollars, and six year's in- terest to July 1, 1877, on that amount, at 6 . percent., will amount to $720,000. We must likewise take into account the fact : that, on the unfunded Old bonds and stocks, no interest has been paid since Juh*, 1871. The amount of these seeuri- |! ties being, (as the last debt statement shows,) $1,828,001, the interest to July 1. 1877, six years, at G per cent. , will lie $658,000. The total debt, under the "dollar for dollar" adjustment, will lie I as follows : 1. "Honest debt" $7,262,231 ; 2. Interest on half of Consolidated 1 'honest debt' ' 720,000 3. Interest on unconsolidated "honest debt" 60S, 000 At "dollar for dollar" $8,640,231 Under the Consolidation Act, as it stands, the whole debt will be $5,998,665. The [j new mode, therefore, breaks up the ad- justment, nearly completed, made in 1873, repudiates absolutely the bonds issued for the Relief of the Treasury, for Interest on the Public Debt, and for the Land Commission, as well as the Consoli- dation bonds representing such bonds, j and makes the public debt ($8,640,231, as j against $5,998,665.) at least $2,641,50fi I more than under the Consolidation Act, which Act involves no repudiation or in- justice for which the present government I is responsible. II. A second mode of adjustment is to recognize the Old bonds as before, and to recognize the Republican bonds, to the extent of the money actually received for them, by or for account of the State. The supporters of this mode are willing enough, they say, to pay back what money was actually derived by the State from the .| Republican bonds. It is somewhat diffi- cult to determine accurately what money was realized by the sale of the bonds, but II we have been able to make a statement I 4 which is sufficiently exact for our present purpose. The whole amount of bonds delivered to Financial Agent Kimpton was $9,514,000, (R. and R, 1874-75, p. 10,) as follows : Bills Receivable $ 500,000 Land Commission 700,000 Relief of Treasury 899,000 Payment of interest 1,450,000 Conversion bonds 5,9 65,000 $9,514,000 To this must be added $200,000 of State bonds bought for account of the Sinking fund. The sales of bonds are reported as follows: R & R. 1869-'70. .$ 300,000 for $ 210,000 1870- '71.. 700,000 " 490,000 1871- '72.. 2,843,000 " 1,503,783 1872- '73.. 4,214,500 " 1,238,344 Total $8,057,500 for $ 3,442,127 And we find (R. & R., 1875-76, p. 94) that the following sales were made of bonds held as collaterals : $ 126,500 in bonds for $ 12,851 350,000 " 92,134 250,000 " 63,819 720,000 " 180,445 200,000 " 47,340 $1,646,500 in bonds for $396,589 The general result of the sales of bonds is * $8,057,500 sold for $3,442,127 1,646,500 " " 396,58 9 $9,704,000 sold for $3,838,716 The State realized 43 cents on the dollar from the eight million dollars of bonds put upon the market. Only $79,000 of Conversion bonds are shewn to have been in the hands of the Financial Agent, or under hypothecation, as far back as Octo- ber, 1872. The inference is, that among the $8,057,500 of bonds sold before the end of 1872 were over $5, 000, 000 of the Conversion bonds which were afterwards repudiated. In point of fact, the bulk of the money realized by the State came from the Conversion bonds which, we estimate, sold for considerably over $2,000,000. It may be objected that, while the State offi- cers received the money, the public did not derive any benefit from it. This line cannot be pursued far. As well might one claim a return of the money paid in the form of State taxes, on the ground that it was wasted. The State officers re- ceived the money, and beyond that, under the mode we are now considering, we cannot go. Under the second mode of adjustment then the debt would be: Old funded debt $5,407,306 Proceeds of bonds sold 3,838,716 Second form of adjustment. . 49,246,022 This mode of adjustment, unequal and unjust in many respects, makes the debt (the difference between $9,246,022 and $5,998,665) at least $3,247,357 more than under the Consolidation Act, and the in- crease will be still larger if we add, as we properly may, the interest on the Old funded debt of $5,407,306. III. A third mode is to recognize the Consolidation bonds and stocks represent- ing the Old debt, reject all other post- Reconstruction bonds and stocks, and complete the funding of the Old debt under the Consolidation Act. The Old debt, October 31, 1868, as previously shown, was $5,407,306 Interest from October 31, 1869, to January 1, 1874 811,095 $6,218,401 Interest on Old debt to, October 31, 1868 434,791 $6,653,192 This Old debt, funded at 50 per cent., is $3,326,596 Bills Receivable 160,000 Bank State bills and interest 1,260,134 Total debt $4,746,730 I 5 This would make the debt more than a million dollars less than under the Consolidation Act ; but at what cost ! One half of the Old debt for which the State received dollar for dollar, in gold, is repu- diated utterly, and no provision is made for any of the New debt. In such a plan as this there is no high principle, and no consistenc}^; it is bald, brutal repudiation. Other modes of adjustment have been suggested. One is to let the Consolidation bonds stand which represent Old bonds, ' and to recognize, at their face, the un- funded Old bonds. This is a more mons- trous proposition than the others, as it in- volves the repudiation of one-half of the principal of the bonds held by those who were willing to compromise with the State in 1874, and since ; and, at the same time, ! gives the last farthing to those inexorable creditors who sullenly held aloof, and gave the State no aid in her extremity. Under this bastard arrangement the debt would be about $3,000,000. OBJECTIONS TO PROPOSED MODES OF RE- ADJUSTMENT. [From The News and Courier, January 8, 1878.] In a previous article we have shown the effect of two of the proposed modes of readjusting the public debt. One of these contemplates the recognition of the Old or Ante-Keconstruction debt, and the re- pudiation of the Republican debt; the other contemplates the recognition of the Old debt, and also the recognition of the Republican debt to the extent of the amount realized, by or for account of the State, from sales of Republican bonds. Under the first mode the debt will be $2,641,568 more than under the Consoli- dation Act of December 22, 1873, and under the second mode the debt will be $3,247,357 more than under the Consoli- dation Act. We have laid stress upon these two modes, and have explained their opera- tion in detail, for the reason that they are the only modes of readjustment that have been suggested which are consistent and in- telligible. The saline statuary who con- tinue to look back while the political world moves forward, may, without self- stultification, take the position that the State Government, from 1868 to 1876, was "revolutionary and void," and that the people, the white citizens, are not re- sponsible for any debt contracted by the "usurpers." They are ready, therefore, to pay the Old debt to the uttermost penny, and will pay nothing else. Another group of politicians take the ground that the State is responsible for what money the State actually received from the sales of bonds. When we pass be- yond the modes proposed by these two groups of readjusters, we come to open and undisguised repudiation. Such is, any proposition to scale the Old debt, while repudiating the whole of the Re- publican debt, or to give to the unfunded Old bonds a better position, or higher value, than is possessed by the Old bonds which have been funded. As a matter of money, the settlement, nearly completed, under the Consolidation Act, is incontestibly cheaper than any other settlement of a non-repudiating character. It is true that the Consolida- tion Act accomplishes this by a scaling which may be regarded as disguised re- pudiation ; but this scaling was not the work of the present Government, nor was it sanctioned, in any way, by the Democ- racy, until it had been clothed with the force of law. The settlement, in many respects, was undesirable, but the public had grown up to it, or settled down to it, and had come to regard it as final. There would not have been any talk of readjust- ment, had it not been supposed that the extent of the frauds, in connection with the debt, had never been made known fully, and that a failure to investigate the debt would leave the State liable for an in- definite amount of spurious bonds and stocks. This is a popular fallacy which we have helped to explode. Assuming, for the moment, that the State is ready to reopen the debt question, and can afford to adopt one of the two modes of readjustment previously described, it is worth while to inquire who would be benefited by such read- justment, and whether it is practicable to accomplish what the advocates of the two modes must be presumed to desire. The fundamental principle, in each mode, is to pay back, dollar for dollar, the money the State actually received from the per- sons who bought bonds of the State. The Old debt on October 31, 1868, as previously shown, was (exclusive of the unfunded interest) $5,407,306; but the amount of Old bonds and stocks out- standing on October 31, 1873. (before the Consolidation Act had passed) vras only $4,051,527. Nearly a million and a half dollars of the Old debt had been converted into other State bonds or stocks, under the operation of the Conversion Act or otherwise. When the State is ready to pay dollar for dollar upon the Old debt, how will she deal with so much of that debt as was converted into Xew debt prior to October 31, 18T3 ? Would it be practicable to divest every bond of its various disguises ? And if every bond can be brought back to its first estate, should the benefit of the State's action go to the present holders of the unfunded and the funded Old bonds, or to those who were their owners in 1868 ? Less than two million dollars of Old bonds and stocks remained unfunded on March 31, 18TT. The remaining three million dollars of Old debt of October 31, 1868, have been consolidated, or are outstanding in the form of Conversion bonds, fundable under the Consolidation Act. It is entire- ly safe to say that nine out of ten of the Old bonds and stocks which have been consolidated, or converted, have passed out of the possession of those who owned them in 1868. The sellers, in selling, reserved nothing; the buyers, in buying, took the bonds and stocks as they were. While the State would, no doubt, desire that the original holder, in 1868, who sold his bonds before or after funding, should get the benefit of any additional value proposed to be conferred upon the Old debt, it is pretty certain that, in law. the present holders of the bonds II would be entitled to that additional value. Under the Consolidation Act, the State can reduce the principal of the Old funded debt (exclusive of interest) to about $2,500,000. The dollar-for-dollar mode of readjust- ment will require the State to pay twice as much, and the bulk of the additional two and a half millions will flow into the pockets of the present holders of the bonds and stocks now representing the Old debt, which bonds and stocks they have bought at prices ranging from 50 to ! 60 cents on the dollar. It would be a magnificent speculation for the bond- holders, and a losing business for the ! State. In fine, there lies at the root of even" proposition to reopen the Consoli- dation Act the virtual impossibility of giv- ing the advantage of any better terms than those of the Consolidation Act to the per- sons, if any, entitled to that advantage. On the other hand, the completion of the settlement under the Consolidation Act plays into the hands of no set of specula- :; tors, inasmuch as. for years, it had been assumed that the Consolidation Act would not be reopened. Similar difficulties are encountered when it is proposed to compensate the purchas- ers of Republican bonds, to the extent of the money they paid the State. Do the persons who thus bought the bonds still hold them ? Moreover, as previously ex- plained, more than two millions of money received by the State came from the Con- . version bonds repudiated by the Republi- cans in 1873. Is it too much to ask that, 1 in any new adjustment, the claims of the holders of these bonds, for which the State 1 got the money, shall be fully recognized? It may be said, however, that if the State cannot make any sweeping change in the debt settlement of 1873, the State can pick and choose among the outstanding bonds, and, on various pretexts, discard some and confirm others. The assump- tion is, that the parentage of any Consoli- , dation bonds, now out, can be clearly I 8 traced. This cannot be done. On March 31, 1877, Consolidation bonds to the amount of $4,155,000 were outstanding, and we have every reason to believe that we are well within bounds in saying that, as to at least one-half of these bonds, it can- not be told whether they represent funded Old bonds or funded Republican bonds. Under the Consolidation Act several classes of bonds were fundable. Bonds belonging to four or five different classes frequently went to the Treasury, in one lot, for con- solidation. In exchange for fifty thousand fundable bonds, ranging in kind from Old bonds to the latest issue of Republi- can bonds, the State (exclusive of in terest) would issue $25,000 of Con- solidation bonds. On the register the $25,000 so issued would be entered against the $50,000 so received. Where the lots were mixed, no particular Consolidation bond represents any par- ticular bond that was funded. When the Consolidation bonds reached their desti- nation they were given to the owners of the funded bonds, and were scattered be- yond recognition. One Consolidation bond was regarded as fully as good as another. Some persons will, of course, suggest that, where the character of any of the bonds is in doubt, the State should take the benefit of the doubt and reject the whole. This is not a tenable position. It is for the State to prove v that the bonds are bad ; not for the holders to prove that they are good. We think we have demonstrated that, as a matter of money, it is not to the in- terest of the people of the State to reopen the settlement of the debt under the Con- solidation Act, and that, short of repu- diation pure and simple, it is the most ad- vantageous settlement that can be effected. We think we have shown likewise that any adventitious advantages now proposed to be given to any class of bonds, funded or unfunded, will enure to the advantage of speculative holders rather than to the benefit of the persons, if any, who, in the first instance, were injured. And we have also shown some of the practical diffi- culties in the way of singling out, for re- pudiation, particular bonds issued un- der the Consolidation Act. The next step in the inquiry is to consider the na- ture and effect of the action of the Tax- payers' Convention of 1871, in relation to the debt of the State. TAX-PAYER'S CONVENTION OF 1871 [From The News and Courier, January 9, 1878.] South Carolina early in 18T1 was throb- bing with excitement. Delegations repre- senting the Conservative citizens had had interviews with Governor Scott, who was profuse in his promises and vociferous in his pleadings for peace. The Ku-Klux still haunted the State officers in their dreams, and no man could tell whether the sharp reaction from the liberalism ex- hibited by the Democrats in the Reform canvass, the preceding summer, would not grow in intensity and plunge the State into worse troubles than those which gave congenial employment to the Circuit Court of the United States, sitting at Columbia, As early as March, it became known that it was the determination of the State authorities to collect two annual taxes in the course of the year. Four million dol- lars, in less than twelve months, were de- manded of the people. Confiscation, un- der the forms of law, stared in the face every citizen who had come honestly by his property. And while the taxes collect- able in one year had risen from 8400,000 a year, before the war, to over $4,000,000 in 1871, the bonded debt of the State was rolling on, like a snow-ball, growing as it went, On October 31, 1870, the public debt was reported to be (R and R., 1870- 71, p. 57) only 87,665,908; but The Charleston Xews confidently asserted that this was millions below the true figure. It was no time for rose-water remedies, and The News, in a series of articles, irresistible in their por- traiture of the wrongs and sufferings of the people, advocated, as the only means of safety, the calling of a Convention of the taxpayers of the State, to ponder the situation and do what brave and saga- : ' cious men might to redress the public grievances. The course recommended met with general favor, and, on March 30, a meeting was held at the rooms of the Chamber of Commerce "to consider the "financial condition of the State, as affect- ing the commercial interests and pros- perity of Charleston.'' The meeting was largely attended, and the preamble and resolutions presented by Mr. Ravenel were unanimously adopted. They were drawn by the writer of this article. The . preamble set forth the fact that the ma- jority of the taxpayers and property- holders were denied any practical power in the Legislature and in the imposition of taxes; that the nione}- raised by tax- ation was excessive in amount, and was improvidently and corruptly expended; that the credit of the State had been pledged illegally, and that it was proposed to pledge the credit of the State for fur- ther loans "which may be negotiated in I "the market to persons who may take "them in ignorance of the circumstances "under which they are issued." This fur- ther loan was the proposed Sterling Loan Fund of 86,000,000. The resolutions declar- ed (1) that "the bonds heretofore issued 1 "without legal sanction, and the so-called "Sterling loan, or aii} T other bonds or obli- ! "gations hereafter issued purporting to be I "under, and by virtue of, the au- thority of the present State Gov- I "eminent, itill not be field binding on ' 'us, and that we shall, in every manner and \\ "at all times, resist the payment thereof, "or the enforcement of any tax to pay the "same, by all legitimate means within our "power/' and declared (2) that "we deem it II "our duty to warn all persons not to re 20 "ceive, by way of purchase, loan or other- wise, any bond or obligation Jiereaft&r "issued, purporting to bind the property "or pledge the credit of the State; and "that all such bonds or obligations will be "held by us to be null and void, as having "been issued in derogation of the rights "of that portion of the people of this State "upon whom the public burdens are made "to rest;" and requested (3) that the tax- payers, in the several counties, do meet and consider this subject, and appoint two delegates to represent each county in a State Convention to be held in Columbia on the second Tuesday in May! There was a prompt and general response, and when the Convention convened in Colum- bia on May 9, 1871, every county in the State was represented. The phraseology of the Charleston reso- lutions was plain and precise. They conveyed a solemn warning to the public that the taxpayers of South Carolina would not be held responsible for any bonds, or other obligations, that had been illegal- ly issued, or that might thereafter be issued. It was fancied that the resolu- tions smacked of repudiation, and this feeling elicited a letter from Gen. M. W. Gary, which will be recalled with interest at this time. The letter is dated Pine Bluff, Ark., April 17, 1871. Gen. Gary says: "Since leaving home I have interchanged views with quite a number of distinguished men of the Democratic party, and with per- sons of financial reputation, and I find that a misapprehension prevails as to the object and intentions of the people of our State touch- ing our present indebtedness. As I understand the resolutions of the Board of Trade and Chamber of Commerce of Charleston, they refer to any further indebtedness of the State, but the impression is abroad that they look to a repudiation of the entire State indebted- ness. "I fully appreciate and endorse the feeling that has prompted our taxpayers to give warning to the party now in power that ■any additional indebtedness, created by cor- ruption and fraud, will not be paid. 11 Repudiation by either States or individuals is a very dangerous alternative, and should be resorted to only to prevent a more dire calamity — the confiscation of our lands, and the expatriation of our v best people. "VVe have lost all save honor in the late struggle for Constitutional liberty, and before we part with that, we should suffer and endure until the keeping the public promises are 'more honored in the breach than in the ob- servance.' " A representative body higher in charac- ter and more eminent in ability than the Taxpayers' Convention has never been seen in South Carolina. Among the dele- gates were Gen. Hagood, now Comptroller- General, Gen. Chesnut, Judge Aldrich, Mr. Henry Gourdin, Mr. G. A. Trenholm, Col. Wm. Wallace, ex-Governor Man- ning, ex-Governor Bonham, General M. C. Butler, now United States Senator, Gen. M. W. Gary, now State Senator, Gen. W. H. Wallace, Speaker of the "Wallace House," Col. W. M. Shannon, Mr. Armistead Burt, Gen. Cannon, now State Senator, Col. Evins, now member of Congress, Col. Thos. Y. Simons and Mr. W. D. Porter, who was chosen Presi- dent. We confine our review to the pro- ceedings in connection with the public debt. For the rest, it can be truthfully said that the Convention of 1871 was the first long step towards the ultimate re- demption of South Carolina. On the second day Col. Simons intro- duced the resolutions which had been adopted in Charleston. These were re- ferred to the Executive Committee, who recommended their adoption, and they were so adopted, as follows : Resolved, That this Convention, represent- ing the property-holders and taxpayers of the State of South Carolina, do hereby deem it our duty to declare, that the so-called Sterling Loan, or any other bonds or obligations, here- after issued, purporting to be under and by virtue of the authority of this State, as at present constituted, will not be held binding onus; and that we recommend to the people of the State, in every manner, and at all 21 times, to resist the payment thereof, or the enforcement of any tax to pay the same, by all legitimate means within their power. Hiso-ved, That we deem it our duty to warn all persons not to receive, by way of pur- chase, loan or otherwise, any bond or obliga- tion Thereafter issued by the present State Govern- ment, or by any subsequent government, in which the property-holders of the State are not represented, purporting to bind the prop- erty or pledge the credit of the State: and that all such bonds or obligations will be held to be null and void, as having been issued in fraud and in derogation of the rights of that portion of the people of this State upon whom the public burdens are made to rest. At the fourth day's session the Commit- tee of Eleven, (Messrs. M. C. Butler, Cad- wallader Jones, G. Cannon, B. W. Ball, W. H. Wallace, R. Lathers, A. M. Lowry, G. A. Trenholm, E. J. Scott, TT. B. Smith, and T. C. TTeatherly,) to whom had been referred resolutions regarding the finan- cial condition of the State, submitted an elaborate report. They reported the funded debt of the State to be $7,665,908, and say : "To the sum of the funded debt, viz ■ $7,665,908 98, must be added, in order to exhibit the sum total of the debt of the State, the cash advanced to the Treasury by the Financiil Agent. This is set down by Mr. Kimpton at the round sum of £800,000, and also the further sum of .$400,000 for bonds sold by Mr. Kimpton since the date of the Comptroller's report, viz : making a grand total of debt of $8,865,908 98. "The sum total of bonds>emaining unsold in the hands of the agent, as already shown by the Comptrollers statement, wan £2,200,- 000. From this amount must be now de- ducted the amount sold as above stated, $400,000, leaving $1,800,000. This amount of bonds, namely, $1,800,000, is pledged for the security of the $800,000 of cash advanced by the agent. ;; As the result of the deliberations of the Committee they recommend the adoption of the following resolution : Resolved, as the sense of this Convention, that the funded debt of the State, as described in the report of the Committee of Eleven of this body, is a valid debt, and that the honor a?idjund,s of the Stoie are lawfully pledged for the redemption thereof. To recapitulate : The Committee of Eleven reported that the funded debt of the State was : Comptroller's Report $7,665,908 Bonds since sold 400,000 Bonds in hands of Financial Agent 1,800.000 Debt in May, 1871 $9,865,908 There was not, and is not, any doubt that the Convention knew the wants and wishes of the people, and when the Con- vention declared that bonds and stocks amounting to $9,865,908 were a valid debt, for the payment of which the honor and funds of the State were lawfully pledged, the people were, m morals, bound by its action. And when that Convention solemnly declared that any bonds or obligations issued there- after w-ould be held to be null and void, they gave full notice and ample warning to the public. The recognition of the existing debt and the repudiation of any subsequent obligation went together, and are inseparable. The Con- vention, while notifying the public what bonds and stocks would be held to be null and void, notified the public likewise what bonds and stocks, or what amount of bonds and stocks, were valid and binding. Unless the State adheres to the terms of its ratification of the existing debt in 1871, it cannot plead, as against the holders of obligations subsequently made, the warning given by the Conven- tion. This principle has an important application. The public debt, as recog- nized and ratified by the Taxpayers' Con- vention, amounted to $9,865,908. The debt recognized and reaffirmed by the Consolidation Act of December 22, 1873, amounts to $9,886,627. There is a differ- ence of only $20,719 between the amount of j debt recognized in 1871, and the amount 22 of debt authorized to be funded in 1873. By sloughing off the $5,965,000 of Conver- sion bonds (such bonds as the Taxpayers' Convention declared, in advance, would be held to be null and void) the Republi- can Convention, in 1873, brought back the debt to within a few thousand dollars of its amount as published to the world in May, 1871. In substance, moreover, the debt is the same in kind, as well as in amount. The following table gives both the debt recognized by the Taxpayers' Convention, and the debt fundable under the Consolidation Act : Convention. Consolidation Old debt, 1871. Act. Acts 1794-1866. . .$4,407,956 $4,051,527 Bills Receivable, Act Aug. 26, 1868. 500,000 484,000 Funding Bank bills, Act Sept. 15,1868. 1,192,150 1,189,600 Interest public debt, Act Aug. 26, 1868. 800,000 1,197,000 Relief of Treasury, Act Feb. 17, 1869. 1,000,000 856,000 Conv'n bonds & stock, Act March 23, 1869 1,265,800 1,641,500 Land Commission, Actsl869-'70 700,000 467,000 Totals $9,865,906 $9,886,627 The increase in the amount of Conver- sion bonds and stock, fundable under the Consolidation Act, represents the amount of other bonds and stocks pre- viously exchanged for Conversion bonds and stock; and the diminution in the amounts of other bonds and stocks is accounted for by such conversions. The only other increase, it will be noted, is in the bonds issued under the Act of August 26, 1868, for the Payment of the Interest on the Public Debt. Of these bonds two sets, of $1,000,000 each, were printed, the second set being in- tended to supply the place of the first. The Committee of Eleven of the Taxpay- ers' Convention say in their report (page 111) that ' '$500,000 (of the first set) were "long since returned and cancelled, as "appears by the assurances given to your "Committee by the Comptroller and "Treasurer. Upon the authority of Mr. "Kimpton, Agent, and Mr. Parker, "Treasurer, it appears also that a further "sum of $400,000 has been returned "within a few days. These ham not "yet been cancelled. Mr. Kimpton also "assured the Committee that the re- gaining $100,000 would soon be re- "turned; that there was not any longer "delay in effecting the exchange than "arose from the necessity of waiting until "the several loans matured, for which the "first bonds had been pledged." In the debt recognized by the Committee only $1,000,000 of the Interest bonds were apparently included, and $200,- 000 of these had been converted into Conversion bonds prior to October 31, 1870. There is, therefore, an apparent over-issue of the Interest bonds to the extent of the difference between $800,000 recognized by the Convention, and $1,197,- 000 recognized by the Consolidation Act. This is $397,000, to which should be added $53,000 of such bonds funded in Conversion bonds in the year ending Oc- tober 31, 1872, making the apparent over- issue $450,000. This is within the amount of such bonds returned to the Treasury, "not yet cancelled," or in the hands of the Agent. These bonds would, at the first glance, appear to be excluded from the benefit of any recognition by the Convention. But the Act of August 26, 1868, does not limit the amount of bonds to be issued, and, as a matter of fact, the public had no means of telling what par- ticular bonds and stocks were approved by the Convention. No list was given, be- yond the list published the previous year by the Comptroller. The declaration that $2,200,000 of other bonds were out- standing, "and were of unquestionable "legality and force as obligations of the "State," (Proceedings, page 111,) would 23 leave the public room for believing that I the whole of the Interest bonds were prop, j erly issued. And this view would be con- firmed by finding them among the bonds provided for in the Consolidation Act. Again, of the Old debt ratified and ap- j approved by the Taxpayers' Convention, l| bonds to the amount of $203,000 fell due on July 1, 1871, and were redeemed. (R. andR, 1871-72, page 514.) As the first $8,000,000 of bonds sold by the Republi- can Administration realized only 43 cents \\ on the dollar, the State did reasonably well, as things went, in substituting $450,000 of new bonds, having 20 years to run, for $203,000 of matured bonds. TTe find then that the warning given by the Taxpayers' Convention in 1871 does | not apply to the bonds and stocks pro- :' vided for in the Consolidation Act of ( 1873; that the Convention formally ratified bonds and stocks virtually the same, in amount and kind, as the debt covered by the Consolidation Act ; that the action j of the Republicans, in repudiating $5,965,000 Conversion bonds, as issued I '•'without authority of law," and absolute- ly "null and void," brought the Consoli- dation Act, in respect of the amount of the debt, into harmony with the declara- tions of the Taxpayers' Convention. When it is remembered, in addition, that the Consolidation Act reduced the whole debt, the debt recognized by ine Taxpay- ers' Convention, to fifty per cent, of its par value, making the debt, with interest to January 1, 1874, only $5,998,665, against $9,865,906, without that interest, under the finding of the Convention, it is amazing that there should be any desire to reopen the settlement under the Con- solidation Act, and it is inconceivable that rjij serious attempt should be made to brand any of the bonds issued, or to be issued, under the Act, as conceived in fraud and tainted with corruption. Far from this, the Consolidation Act, in so far as it declared the amount of the debt, was founded on the bed-rock of the Tax- payers' Convention, and on that firm bottom stands every single bond issued, or to be issued, under the Consolidation Act. RESULT OF DIFFERENT INVESTIGATIONS. [From The News and Courier, January io, 1878.] The settlement of the Public Debt of South Carolina under the Consolidation Act of December 22, 1873, is, as a matter of money, more advantageous to the State than any other mode of settlement that has been proposed, other than barefaced, undisguised repudiation. And the prin- cipal of the debt and interest, fundable under the Consolidation Act, is substan- tially, in both amount and kind, the identical debt for the redemption of which "the honor and funds of the State "are lawfully pleged," as solemnly de- clared by the Taxpayers' Convention in May, 1871. Yet it has been reported that the Bond Commission, whose report will be submitted to the General Assembly next week, have discovered huge frauds, amounting to a million dollars or more, in the bonds and stocks funded or fundable under the Consolidation Act, and that the validity of some of the Con- solidation bonds is in question. The Commission keep their own counsel, and, without pretending to foreshadow their conclusions, we find strong reasons for believing that the current rumors are echoes or rehashes of the results of in- vestigations, or charges, previously made, and with which the people of the State are, or were, familiar. We will state, as briefly as is consistent with clearness, the result of previous inquiries. I. The debt of the State in May, 1871, as reported to, and recognized by, the Taxpayers' Convention, was $9,865,906. Before the autumn it was ascertained, however, that a far larger amount of bonds and stocks was outstanding, and in De- cember the House of Representatives appointed a committee to make an in- vestigation. Mr. C. C. Bowen submitted the report of the committee on December 14, 1871. (H. J. 1871-72, page 136.) The committee charge that, exclusive of the issue of bonds for redeeming the bills of the Bank of the State, the issue of only $3,200,000 of New bonds had been au- thorized, viz: 1. Bills Receivable bonds $ 500,000 Act August 26, 1868. 2. Interest on debt bonds 1,000,000 Act August 26, 1868. 3. Relief of Treasury bonds 1,000,000 Act February 17, 1869. Land Commission bonds. 700,000 Acts 1869 and 1870. Total $ 3,200,000 The amount of New bonds outstanding was, according to the sworn statement of the State Treasurer, $9,514,000; the dif- ference between that amount and $3,200,000 being an over issue, amount- ing to $6,314,000. The committee show that, under the Act to redeem the Bills Receivable, the Governor was au- thorized to borrow, within twelvemonths, not exceeding $500,000; that, under the Act to authorize a State loan to pay the interest on the debt, the Governor was au- thorized to borrow, within twelve months, not exceeding $1,000,000; and that, under the Act to authorize a loan for the relief of the Treasury, authority was given to borrow, within twelve months, $1,000,000. The committee report also that the au- thority to borrow under the Act of Feb- ruary 17, 1869, expired on February 17, 1870, and that the authority to borrow under the two Acts of August 26, 1868, (they having been extended one year,) expired on August 26, 1870. Their 2 5 conclusion is, that there was no authority for any further issue of bonds, under the Acts, after the dates when the Acts ex- pired. The committee further say that the Conversion Act of March 23, 1869, "was not intended to be used for the pur- pose of increasing the State debt, but "solely for "the conversion of some out- standing security." The report was signed by C. C. Bowen, B. Byas, F. H. Frost, P. J. O'Connel and W. H. Jones, Jr. II. The Joint Special Committee ap- pointed at the Legislative session of 1870-71 submitted a report under date of December 20, 1871. They reported that they had examined the books of Treasurer Parker and of Financial Agent Kimpton, and found that the American Bank Note Company had printed, for the State, bonds and stocks amounting to $22,540,- 000. They account for them as f ollows : In Treasurer's office § 9,072,800 Cancelled and destroyed 1,001,000 Issued: Conversion bonds 1,260,500 Bank bills 1,259,000 Conversion stock 432,700 Total $13,026,000 This amount, deducted from the total amount printed, leaves a balance of $9,514,000, to be accounted for, as in the report of the Bowen Committee. The Joint Committee deduct $200,000 as passed to the credit of the Sinking Fund Commission. Their apparent conclusion, not expressed, is that the $9,314,000 re- maining were issued under the Bills Re- ceivable Act, the Interest on Public Debt Act, the Relief of the Treasury Act, the Land Commission Acts, and the Conver- sion Act. They say that they, "after a careful and "thorough examination, are fully satisfied "that the entire bonded debt of the State "of South Carolina is $15,767,908 (being "what they style $6,453,908 of ante-war "debt, added to the $9,314,000 of New "debt) and has been created in accordance "with the several Acts authorizing the "issuing of State securities, * * * for "the reason that no Act of the General "Assembly limited the amount to be "issued," and that while bonds have been issued since the date fixed by law, they were to cover loans negotiated previous to the expiration of the Acts. III. Next comes the full report of the famous High Joint Committee appointed at the session of 1870-71, consisting of B. F. Whittemore and S. A. Swails on the part of the Senate, and J. B. Dennis, W. H. Gardner and T. Hurley on the part of the House. The report covers nearly three hundred pages. They report (pages 46-7) the whole legitimate debt to be $9, 865, 908. It is made up as follows : Debt C. G. Report, Oct. 31, '70. . .$7,665,908 In hands of Financial Agent: Interest bonds $ 500,000 Relief of Treasury. . . . 1,000,000 Land Commission.... 700,000—2,200,000 Total debt $9,865,908 This is the exact amount and kind of debt approved by the Taxpayers' Conven- tion in the preceding May. The High Joint Committee find (page 260) that bonds and stocks to the amount of $22,540,000 had been printed, and that, of these bonds and stocks, $8,500,000, it was claimed, had not been used, making the whole debt (page 261) $14,040,000. To this amount the Committee subsequently (page 263) add $1,000,000 of Conversion bonds (the second set for Interest on Public Debt) and $200,000 of bonds purchased with the proceeds of the sale of the Agricultural Land Scrip, making the whole debt $15,240,000. Still later (page 267) the Committee make the whole debt, (includ- ing $200,000 of Agricultural Land Scrip bonds) no less than $16,371,306. The final conclusion is (page 268) that the "fraudu- lent issue" was $6,314,000. This agrees with Report I. 26 IV. The next matter affecting the debt was the effort of Morton, Bliss & Co. to compel Comptroller-General Hoge to levy upon all the taxable property in the State the tax necessary to raise a sum sufficient to pay the interest due, and becoming due, upon State bonds held by them. These bonds belonged to five classes : 1. Bills Re- ceivable bonds, Act August 26, 1868; 2,. Interest on Public Debt bonds, Act August 26, 1868; 3, Relief of the Treasury bonds, Act February 17, 1869; 4, Land Commis- sion bonds, Acts of March 27, 1869, and March 1, 1870. Proceedings were taken, by mandamus, in the State Supreme Court, and the case was argued at the April term, 1873. Attorney-General Mel- ton appeared for the State. He con- tended, amongst other things, that the bonds in question were not valid obli- gations of the State, for the reason that (1) they were not sold at the highest market price as required by law ; that (2) a large portion of the bonds in question had been returned to the Treasury and re- issued without warrant of law ; that (3) the Acts are unconstitutional and void, in that they do not levy a tax sufficient to pay the annual interest of the debt they con- tracted; that (4) at least $7,191,700 of the $15,851,327 of public debt reported by the Treasurer on October 31, 1873, is not the valid debt of the State, and the bonds enu- merated in that report are to that extent outstanding without authority of law; that (5) the registration of the debt ordered by the Act of March 13, 1872, was incom- plete. V. At the legislative session of 1873-74 a Joint Special Committee was appointed to ascertain what bonds of the State were pledged by the Financial Agent as collate- ral security for State loans, it having been alleged that of the $9,514,000 of new bonds issued "during the late Administra- tion" the Financial Agent had received >nly $8,472,000, and that only $7,757,000 of these bonds had been sold, leav- ing $1,756,500 entirely unaccounted for. The Chairman of the Committee was Senator Dunn, of Horry, afterwards Comptroller-General, who, under date of June 17, 1874, made a report to Treasurer Cardozo showing what bonds were under hypothecation. The Committee reported (R. and R. 1874-75, page 9) that among the bonds hypothecated were bonds amounting to $1,201,000 "pledged "by the Financial Agent subsequent to "the time when the authority to so "pledge them had ceased according to "terms of the several Acts creating them, "and also subsequent to the time when "the full amount of money authorized to "be borrowed on the said bonds had been "obtained." (See also I and II.) The bonds referred to are bonds issued under the familiar Acts of August 26, 1868, and February 17, 1869. The committee also say that among the bonds pledged by the Financial Agent are $215,000 of Orr bonds issued under the Act of September, 1866, to fund past due interest on the public debt. The committee left it to the Treas- urer to determine whether he would not be warranted in declining to fund the designated bonds until the facts could be laid before the General Assembly. In their full report the committee (R. and R. 1874-75, page 723,) elaborate the questions raised in the statement submitted to Trea- surer Cardozo. They insist that, under the several Acts, only $3,200,000 in money (see I and II) could be lawfully raised, and that $8,057,500 in bonds had sold for $3,442,127; that, after disposing of these bonds the Financial Agent still had in hand $1,456,500 of bonds delivered to him for hypothecation and sale, (of which amount $900,000 had once been re- deemed, returned to the Treasury and re- issued,) as well as $200,000 of State bonds purchased for the Sinking Fund Commis- sion, and $191,800 of State bonds purchased with the proceeds of the Land Scrip. These bonds, amounting in all to $1,848,- 2/ 800, were re-hypothecated at various dates, from September 21, 1871, to September 10, 1872, for loans amounting to $547,522. The committee, therefore, report that the hypothecation of the $1,848,300 of bonds was illegal, because the time allowed for hypothecation had expired ; the full amount authorized had already been obtained, and the hypothecation of the Sinking Fund bonds and Land Scrip bonds was wholly illegal. VI. The next step was the appointment of a Special Joint Committee to ascertain what bonds and coupons had been funded under the Consolidation Act. Senator Dunn was the chairman of the Committee. They reported (R and R. 1874-75, p. 652,) that $978,500 of the bonds which had been funded belonged to the class of bonds which the Special Committee (see X) re- ported as having "been pledged "without "legal authority,'"' and which should not have been "funded at all." Also, that de tached coupons to the amount of $454,021 had been improperly funded. These in- clude the §300,000 of coupons funded by the late Y. J. P. Owens. It is not necessary to give in detail the answers made, at different times, to the charges contained in the reports we have summarized, or to set forth, at length, the explanations and counter-explanations of accusers and accused. The main points can be quickly and., it would seem, satis- factorily met. 1. The charge that there had been an over-issue of $6,314,000 of bonds (see I and III) was dropped before December 22, 1878, when $5,905,000 of Conversion bonds were declared "null and void/' at the in- stance of those who had illegally and fraudulently caused them to be issued. 2. The remaining amount of bonds, and stocks alleged to have been over-issued represents the difference between the amounts of bonds actually issued under the two Acts of August 20, 18G8, and the Act of February 17, 1869, and the niaxi- ! ' mum amount which, according to the ; Bowen Committee, for example, could be issued lawfully. A glance at the Acts in question shows that the amount of money to be raised is specified, while the amount of bonds to be issued is not. Authority was given in the three Acts before mentioned to I borrow not exceeding $2,500,000, "on the j! "credit of the State, on coupon bonds." I There was full authority to issue $10,000,- j 000 of bonds, if the money could not be obtained on a less amount. In 1868 State bonds were very low, and could only be borrowed on at 25 or 30 cents on the dollar. Knowing the character of the State officers, the public must be surprised at their moderation. They only issued (E. and E. 1874-75, page 12,) bonds to the amount of $2,849,000. 3. The next allegation is that State bonds were hypothecated after the ex- piration of the time allowed by law for such hypothecation. This allegation has || been renewed from time to time, and is II as lively to-day as when Senator Dunn and Mr. T. S. Cavender resuscitated it in 1874. The error appears to lie in treat- ing the last hypothecations as if they had : been the first. The first hypothecation I was in 1868 or 1869, and the loans were renewed from that time. The facts were known to the General Assembly when the Consolidation Act was passed, and when Senator Dunn invited Attorney-Gen. Mel- !! ton to prevent the funding of the bonds alleged to have been improperly hypothe- cated, that officer declined to interfere. He said (E. andE. 74-75, p. 469 :) "I deemed "it my duty to decline to take the action "proposed by Senator Dunn, and intima- "ted to him that, in my judgment, the "interests of the State demanded that I "should, on the contrary, resist any pro "ceeding which would operate to im- "pede or hinder the successful accom- plishment of the scheme which had been "adopted by the Legislature for the settle- cc ment of the bonded debt of the State. 28 "The amount of bonds obnoxious to the "objections urged is comparatively small, "whilst the result would probably be to ' 'reopen the settlement, and afford to the "holders of that portion of the debt which "had been declared fraudulent and void ' 'an opportunity to include their claims, "and thus increase the debt almost inde- "finitely. To state the argument more "plainly, without accuracy as to figures, "the proceeding would at best diminish "the debt by less than one million "dollars on the one hand, and would "probably on the other hand increase the "debt by more than three million dollars. "* * * Besides in the cases at the suit of "Morton, Bliss & Co., facts were alleged "against each class of bonds of like char- acter, and of equal force, to those now ' 'suggested by Senator Dunn. The Supreme ' ' Court declined to allow inquiry into those ' 'facts, and * * * I have no reason to ' 'suppose that the objections now urged by "Senator Dunn would be more favorably "considered." This statement by the Attorney-General covers the objections raised in the proceedings by Morton, Bliss & Co. The mandamus they asked for was ordered to issue. 4. The whole amount of bonds alleged to have been improperly hypothecated is (see V) only $1,848,300. The State had its choice between paying the money for which they were hypothecated, and allow- ing the hypothecated bonds to be sold out and funded. Of the two courses the lat- ter was the lesser burden to the peo- ple. Whatever the illegality of the hypothecation of the bonds, there is no shadow of doubt that the Legislature could by subsequent action cure the defect, and waive the non-com- pliance with the terms of the origi- nal Act. This principle is expounded Avith much force and clearness in the de- cision of the Supreme Court in the case of Morton, Bliss & Co. We will assume that the statute was not complied with, and that the bonds were improperly hypothe- cated. It is not denied that the State could authorize the issue of the bonds, and could have authorized them to be hypothecated for am indefinite, as for a definite, length of time. The question, in the Morton, Bliss & Co. case, being whether certain bonds were invali- dated by not having been sold for "the "highest price," as required bylaw, the Court said : "It appears, therefore, that "the Legislature possessed authority in ' 'the first instance to authorize the mode of 'disposition claimed by the respondent ("the State) to have been employed in the "case of the bonds in suit. Thus we "have all the elements requisite to the ap- plication of the ordinary rule of waiver, "so familiar that it need not be stated at "large, nor fortified by authorities. The "Legislature had undoubted authority to "waive want of conformity as to a matter "purely within its own discretion. " x " * "This is the idea of justice that the State, "under the form of law, imposes upon "citizens, as the test of rectitude in "their mutual dealings, and it can claim "for itself the benefit of no other code of "morals, or rules of fair dealing, than "such as it makes a part of its legal and "judicial system." In like manner the State, by the Validating and Consolida- tion Acts, waived the non-compliance, if any, with the terms of the Acts, limiting the period of time in which money might be borrowed. 5. The Orr bonds (see V) said to have been hypothecated, are reported to have come into the possession of the Financial Agent by purchase, for the Sinking Fund Conversion, or in exchange for other bonds of like amount. (See statements of Kimpton and Cardozo, R. and R, , 1874-75.) 6. We attach no importance to the effort to cast out the $200,000 of Sinking Fund bonds and the $191,800 of Land Scrip bonds (see V) improperly hypothe- 2 9 cated. The wrongful act of the Agent does not affect the character of the bonds. They were ordinary bonds, and nobody could know that they belonged to a special fund. 7. A far more serious charge is that re- jj lating to the funding of 8454.021 of de- tached coupons which had already been paid, or which belonged to bonds which had not been issued. The facts are dis- I puted, and the letter of the Consolidation Act authorized the funding of the coupons of the bonds and stocks recognized in the Act. But it would not profit the State to jj destroy the Consolidation Act for the sake of about $200,000 of bonds. More than this, the State has already taken its remedy as to §300,000 of the questionable coupons. On account of the funding of I these coupons the State obtained a ver- dict against Ex-Treasurer Parker for $75,000. The State cannot recover dam- ages from the culprit official, and, in addi- tion, repudiate the bonds issued. To recapitulate : Xow that the Conver- sion bonds are out of the way, the whole amount of State bonds alleged to be in any way fraudulent is, in round numbers, $2,200,000. This, without interest, is equivalent to $1,100,000 of Consolidation bonds. The objections to the impugned bonds are, in some aspects, frivolous. Every one of the objections has been cured hy Act of Assembly, under the de- cree of the Supreme Court, or has been cured by the action of a higher authori- ty, the one Court of last resort, the peo- ple of the State. RATIFICATION OF THE CONSOLIDATION ACT BY THE PEOPLE. [From The News and Courier, January ii, 1878.] The settlement of the public debt, under the Consolidation Act, was un- questioned until the meeting of the pres- ent General Assembly in extra session last July. There was no thought of dis- turbing it, for the people knew that, on the whole, they were benefited by the settlement, and could hardly hope to make better terms with the public credi- tors. The acquiescence of the persons most interested, the bond-holders, is shown by the rapidity with which bonds and stocks were funded. The amount of Consolidation bonds and stock issued, year by year, is as follows : Year ending October 31, 1874 .... $993,584 October 31, 1875. . . . 2,616,670 October 31, 1876. . . . 728,502 Four months to March 31, 1877. . 57,534 Total $4,396,290 It is safe to say that had the process of funding been continued, after the instal- lation of Governor Hampton, the State debt would now be less than $6,000,000, and the credit of South Carolina would stand as high, in the money markets of the United States and of Europe, as it did before the accomplishment of emancipation and the advent of political reconstruction. It is true that the bondholder was required to sacrifice one-half the amount of the principal of his bonds; but he found his compensation, or expected to do so, in the certainty that the freedom of the Con- solidation bond from stigma, and the combined will and ability of the people to fulfil their obligations, would make the new security,in the end, more valuable than the old. What reason there was for such confidence will now be shown. In 1874 ex-Attorney-General Chamber- lain became a candidate for the Republi- can nomination for Governor. The oppo- sition to him culminated in the with- drawal of a number of Republicans from the State Convention by which he was nominated. By those who so withdrew, the Independent Republican movement was organized, and Judge Green was nominated for Governor. Throughout the canvass an effective argument used by the opponents of Chamberlain was that he and his followers contemplated some reopening of the debt question, which would prevent the State from set- tling down, in safety, to a debt of six mil- lions, under the Consolidation Act. The Republican platform had in it a Consoli- dation plank. It reads : • 4 'We especially pledge ourselves to maintain the settlement of the public debt as made last winter.' 1 '' The Independent Republican Conven- tion adopted the platform of the Regular Republicans, and the Conservative or Democratic Convention, which met in Columbia in October 1874, determined to make no nominations, for State officers, and advised the people to vote for the Independent Republican candidates. Throughout the canvass not a word was said, by the Democrats, against the Con- solidation Act. The only fear seemed to be that so advantageous a settlement would not be allowed to stand. Senator Dunn, a leading Independent, alluded, on the stump, to the supposed illegal character of particular bonds which were funded or to be funded under the Act, but this was 3 not a new tale and it attracted little at- tention. When the canvass closed, and Mr. Chamberlain was installed, the new administration, to the relief of the peo- ple, seemed bent on finishing up the ad- justment of the debt "as made last winter." The efforts to cast a doubt upon some of the fundable bonds, or Consolidation debt, met with no especial favor. Confi- dence, for once, was a plant of quick growth. Time rolled on and Wade Hampton was nominated for Governor. It was not thought necessary, if any thought was given the matter, to make any special mention of the debt settlement in the Dem- ocratic platform. In this State the Dem- ocratic party has always been the party of honesty. Yet there were linger- ing doubts, as to the attitude of the party towards the Consolidation Act. These doubts found expression in, and out of, the State, and the State Executive Com- mittee of the Democratic party, as in duty and honor bound, promptly placed the Democracy squarely on the record. The following official declaration was published : Rooms of the State Dem. Ex. Com., ) Columbia, S. C, Oct. 4, 1876. f In answer to inquiries on the State debt and Education, we reply that, on the points made, the question had already been anstoered by the Democratic vote in the Legisla- ture, but to remove all doubt, be it 1. Resolved, That the Democratic party will give its support to the adoption of the pro- posed amendment to the Constitution, (levy- ing a minimum annual tax of two mills for the support of the public schools.) 2. Resolved, That the State debt, having been practically adjusted by the Consolida- tion Act of December 22, 1873, and most of the creditors having come in, under that Act, we consider the adjustment final, and pledge THE PARTY TO ABIDE BY IT. The State Democratic Committee was chosen by the State Convention. It is composed of gentlemen of high ability and exalted character. So satisfied were the members of the feeling and temper of the Democratic party, the property-hold- ers and taxpayers of South Carolina, that they had not thought it possible that there could be any suspicion that the Consolidation Act would be tampered with, if the Hampton ticket were elected. To remove all doubt, however, they de- clared the adjustment under the Act of December 22, 1873, to be final, and pledged the party to abide by it. Their action bound, and binds, every one of the ninety thousand Democrats who, on that glorious November day, the day of our deliverance, cast their votes for Hampton, It is now too late to say that the State Committee exceeded their authority. Not a voice was raised' in protest. The resolutions of the Committee were accept- ed and applauded in every part of the State. A more solemn pledge remained to be given, a pledge that is conclusive, if there is, in political parties and public officers, any regard for plighted word, for private interest and the public good. The members of the House of Represen- tatives met in Columbia, on November 28, 1876. Upon the refusal of the officer com- manding the United States troops to admit them to their Hall in the State-House, the Democratic members, with some Repub- licans, withdrew to the Carolina Hall, where they organized the body known to history as the Wallace House, the body afterwards declared by the Supreme Court to be the legally constituted House of Representatives of South Carolina. The Senate held aloof. It became necessary to provide money for the support of the Hampton Government, and on December 20 Mr. Sheppard (now Speaker of the House of Representatives) introduced a series of resolutions authorizing, and pro- viding for, the collection of a voluntary tax. The eighth resolution is as follows : "8. That in order to a correct understand- ing of our objects and purposes by all the people, it is proper that we should, and we hereby do, reiterate in good, faith our pledge 3 2 to redeem at the earliest practicable moment the credit of the State, by the payment of the ma- tured interest on the valid, legal and recog- nized bonded indebtedness of the State, as now provided FOR by law; but it is submit- ted that, until the several departments of the Government shall have resumed the discharge of their respective ordinary constitutional functions, it will be in vain to attempt the ac- complishment of such a laudable purpose." Mr. Aldrich moved to strike out the eighth resolution. The motion was not se- conded, and the resolutions were agreed to Language cannot be plainer than the language of the resolution. The action of the State Executive Committee was borne in mind. In the anxieties of the hour, the "Wallace House did not forget their "pledge to redeem * * the credit of ' 'the State. " Lest there should be any mis- understanding, the resolution declared the way in which the pledge should be re- deemed, i. e., "by the payment of the ma- "tured interest on the valid, legal and recog- "nized bonded indebtedness of the State" To make assurance doubly sure, they de- clared that the indebtedness on which the interest shall be paid is "the bonded in- debtedness of the State as now provi- ded by law," i.e., under the Consoli- dation Act. The resolution of the House of Representatives, like the resolution of the State Executive Committee, makes no distinction between the bonds and stock already issued under the Consolidation Act, and the bonds and stocks authorized to be funded and not then funded under the Act. By the resolutions the State recog- nizes both the outstanding Consolidation bonds and stock and the other bonds and stocks, not already funded, described in the Act. The rejection of any single bond or certificate of stock of the $4,396,290 of Consolidation securities already issued, or the denial of the right \o be funded, at- taching to the $2,704,551 of debt out- standing and unfunded, is a violation of the emphatic promise of a great political party, and sets at naught the solemn pledge of the House of Representatives of the State. The members of the Wallace House constitute a majority of the present House of Representatives. They who were not in the Wallace House are bound by the action of the State Democratic Commit- tee. Nay ! every dollar of voluntary tax paid under the resolutions of December 20, 1876, binds the General Assembly to an observance of their "pledge," in letter and spirit; for it was on the faith of the resolutions that the tax was paid. To give "a correct understanding" of their ob- jects and purposes "by all the people" the House of ■ Representatives proclaimed their intention to redeem the public credit. And it was meet and right that the indebt- edness recognized by the Consolidation Act, standing on the imposing ability and unsullied purity of the Taxpayers' Convention, ratified again and again by the people, as taxpayers and as bondhold- ers, should, when the fight was won and Home Rule was secured, be formally re- affirmed by the body which declared Hampton's election, and which was to all intents and purposes the exponent of the desires, interests and feelings of the peo- ple of the State. CAN THE STATE REPUDIATE!— THE CONSOLIDATION ACT A CONTRACT WITH HER CREDITORS FROM WHICH THERE IS NO ESCAPE. [From The News and ( The Consolidation Act, as explained in previous articles, authorizes the funding of bonds and stocks, to the amount of $9,886,627, in Consolidation bonds or stock, at the rate of 50 per cent, of the face value of the bonds and stocks funded and surrendered. It has been demon- strated that this adjustment of the debt (coupled with the Republican repudiation of the Conversion bonds) will make the whole public debt, when the funding shall be completed, $5,998,565 as against a debt of $15,851,627 on October 31, 1873. Also that this adjustment makes the debt $2,641,566 less than it would be if the Ante-Reconstruction debt, funded and un- funded, were paid at its full value, and the Post-Reconstruction or Republican debt were repudiated. Also that this ad- justment, under the Consolidation Act, makes the debt $3,247,357 less than it would be if the Ante-Reconstruction debt were paid in full, and the Post-Reconstruc- tion bonds were recognized to the extent of the money actually received for them, by or for account of the State. Also that by com- mon consent of the people from 1874 to 1877, by the action of the Democratic members of the Legislature, by the pledge of the State Democratic Executive Com- mittee in 1876 and the f ormal resolution of the present House of Representatives in December, 1876, the Democratic party, the State, is bound in honor to maintain inviolate the settlement in process of com- pletion under the Consolidation Act. It remains to consider how far the State can, if it so desire, repudiate or set aside the Consolidation Act, and the bonds and Courier, January 12, 1S7S.] stock issued in conformity with its pro- visions. Two classes of bonds and stocks are within the scope of the Consolidation Act. 1. Bonds and stocks to the amount of $2,704,551, authorized by the Act to be funded, and not yet funded. 2. Consoli- dation bonds and stock, to the amount of $4,396,290, already issued under the Act. These two classes of indebtedness will be considered separately. The fundable bonds and stocks are en- titled to be funded on presentation. There is no warrant for the suspension of the funding. By the terms of the Consolida- tion Act, the neglect or refusal of any State officer to perform any duty devolved upon him by the Act subjects him to in- dictment for felony, and, by the Act, the Treasurer is "required" to receive the fundable bonds and stocks and issue in exchange Consolidation bonds or stocks. The Act provides that no tax shall "ever "be levied to pay the interest or principal" on any of the fundable bonds or stocks, so long as they remain outstanding in their present form. This was done to induce the holders to promptly exchange their securities. The stringent provisions in I relation to the refusal of any officer to perform his duty under the Act gave as- surance to the holders of the fundable debt that they would get Consolidation bonds or stock, whenever they were ready to exchange or fund. It is evident that it would be a violation of the com- pact to refuse to issue Consolidation bonds or stock in exchange for any of the out- standing fundable debt. Moreover, the 34 State cannot relieve itself from one part of the bargain without absolving its credi- tors from their obligations under the Act. The Consolidation Act was essentially a compromise, and the State cannot, with good grace, insist that holders of one set of bonds and stocks shall rest con- tent with fifty cents on the dollar, when the State gives nothing whatever to the holders of another set of bonds and stocks equally entitled to be funded at one-half of their face value. The Act is in the na- ture of a compromise with a body of creditors. Most of them have accepted the terms offered. Can the State hold the consenting creditors to the terms of the compromise, if it deny the creditors who have not yet come in every benefit the compromise was expected to secure to them, and to which, without limitation of time, they were entitled on and after the passage of the Act? Such a course would be inconsistent, to say the least, with the declarations and resolutions by which the people Je held to an exact compliance with ' e terms of the settlement under the _ct. The holders of the Consolidation bonds and stocks occupy a different position. It is provided by the Act that the Consoli- dation bonds and stock shall {'bear upon 1 'their face the declaration that the pay- ment of the interest and the redemption ' 'of thu principal is secured by the levy of "an annual tax of two (2) mills upon the "dollar upon the entire taxable property "of the State, which declaration shall be con- "sidered a contract entered into between the "Slate and every Jwlder of said bonds and "stocks." Also that " all coupons upon the "(Consolidation) bonds and the interest "orders of said certificates of (Consolida- "tion) stock, herein authorized to be "issued shall be received in payment of all "taxes due the State during tlie year in "which they mature, except for tax levied for "the public schools ." Also that "the faith, ' 'credit and funds of the State are hereby "solemnly pledged for the punctual pay- "ment of the interest and the final re- demption of the principal of said (Con- solidation) bonds and stocks,and for pro- viding a surplus fund for that pur- "pose." The Consolidation bonds (omitting num- bers, amounts and signatures,) read as follows : "The State of South Carolina promises to pay to the bearer the sum of dollars on the 1st day of July, 1893, with interest at the rate of six per cent, per annum, payable semi-annually, on the first days of January and July in each year, in the cities of New York and Columbia, South Carolina, on the presentation of the proper coupons hereto an- nexed, bearing the signature of the State Treasurer, said coupons being received in pay- ment of all taxes due the State during the year in which they mature, except for tax levied for the public schools. "The payment of the interest and the re- demption of the principal of this bond is se- cured by the levy of an annual tax of two mills upon the entire taxable property of the State. The faith, credit and funds of the State are hereby solemnly pledged for the punctual payment of the interest and redemp- tion of the principal of this bond by Act of the General Assembly, approved December 22, 1873." The coupons of the Consolidation bonds bear the following endorsement : Receivable in payment of all taxes, except school tax. As, in respect of the annual tax and the receivability for taxes, the interest orders of the Consolidation stock and the coupons of the Consolidation bonds occupy precisely the same position, it will be sufficient, in this discussion, to deal exclusively with the Consolidation bonds and coupons. Whatever conclu- sions are reached, apply equally to bonds and stock, to coupons and interest orders. Every holder of a Consolidation bond or coupon is advised, by the terms of the bond or coupon, of the character and ex- tent of his rights and remedies. The de- 35 liberate purpose, in framing the Consoli- dation Act, was to give the bondholder the power to enforce the payment of the principal and interest of his bond. This was known by the State, and is fully understood by the bondholder. It is morally certain, therefore, that, if the State refuse to pay interest on any Con- solidation bond, or continue to refuse to receive the coupons for State taxes, the bondholders will take proceedings to en- force their rights. The first remedy open to the bondhold- ers is in connection with the provision for the levy of an annual tax for the payment of the interest and principal of the bonds. It was decided by the Supreme Court of this State, in the case of Morton, Bliss & Co., vs. Comptroller General, April term, 1873, (long before the passage of the Con- solidation Act) that where provision is made for the levy of an annual tax, as in the Consolidation Act, the inhibition of the Constitution of the United States that "no State shall pass any law impairing the "obligation of contracts,'' prevents the Legislature of the State from depriving the public creditor of his remedy to en- force the collection of the tax under the law of force at the passage of the Act. The Court further decided that such a provision for an annual tax both levies the tax and appropriates it to the payment of interest, and that no further legislation is necessary. The Supreme Court in 1873 consisted of Chief Justice Moses, and As- sociate Justices Willard (now Chief Jus- tice) and Wright. Whatever the degree of respect in which the Supreme Court, as constituted in 1873, is held, the decisions of the Court are law, in this State, until reversed. It is most likely, however, that the holders of Consolidation bonds would direct their efforts to enforcing the receiv- ability of the coupons for taxes, rather than to an enforcement of the levy, col- lection and disbursement of an annual tax. 5 The coupons of the Consolidation bonds are by the Act receivable "in payment of "all taxes due the State in the year in "which they mature, except for tax levied "for the public schools." They were so received up to the time of the election of Governor Hampton. When the House of Representatives (December 20, 1876) au- thorized the collection of a voluntary tax, and reiterated the "pledge" to redeem the credit of the State by the payment of the interest on the bonded debt "as now ' 'provided for by law, " they submitted that it was "in vain to attempt the accomplish- "ment of such a laudable purpose" until the several departments of the govern- ment had resumed the discharge of their functions ; and (in the ninth resolution) they "earnestly request that, in order to "the purposes hereinabove set forth, all "persons shall tender in payment of the "sums required only gold and silver coin, "United States currency an "National "Bank notes." The people took 1 c House of Representatives at their worn, , nd in not more than one or two cases, if any, were coupons tendered in payment of the Hampton tax. The regular Supply and Appropriation Act was approved June 9, 1877, and provides "that all taxes assessed "and payable under this Act shall be paid "in the following kind of funds and no "other : Gold and silver coin, United "States currency and National Bank "notes." This excludes the Consolidation coupons. The issue is squarely made up. It is fortunate, therefore, that there is a decision of an appellate tribunal of the highest order of respectability, in a pre- cisely analagous case, which will serve as a guide and warning. This is, the deci- sion of the Court of Appeals of the State of Virginia, in the cases of Antoni vs. Wright, Sheriff, and Wright, Sheriff, vs. Smith, November Term, 1872. They in- volve the same question. The Act of Assembly of Virginia, ap. proved March 30, 1871, entitled "An Act 36 "to provide for the funding and payment "of the public debt," provides that "the "coupons attached to the bonds to be "issued under that Act, shall be payable "semi-annually and be receivable, at and "after maturity, for all taxes, debts, dues and "demands due the State, ivhich shall be ex- " pressed on their face." As will be seen by reference to the wording of the Consolida- tion bonds and coupons, the only material difference between the Virginia Act and the Consolidation Act is, that in Virginia the coupons are receivable, after maturity, for all taxes, while the Consolidation bonds are only receivable for the taxes of the year in which they mature. The Virginia Act of March 7, 1872, prohibited the re- ceipt, in payment of taxes, of "anything "else than gold or silver coin, United "States Treasury notes, or notes of the "National Banks of the United States." This agrees with the South Carolina Sup- ply Act of June 9, 1877. Andrew Antoni, a citizen of Richmond, applied to the Court of Appeals for a writ of mandamus to com- pel John Wright, Sheriff, to receive in payment of taxes a due coupon of one of the bonds issued under the Virginia Fund- ing Act of March 30, 1871. A. A. Smith made a similar application to the Circuit Court of Richmond. The Sheriff set up several objections to the issue of the man- damus. Smith demurred. The Circuit Court directed that a peremptory mandamus issue commanding the {Sheriff to receive the coupon. Wright appealed. The cases were argued by the Attorney-General for the Sheriff, and by Ould and Carrington, and B. T. Johnson & Roy all for the petitioners and appellee. The Court of Appeals decided that the Funding Act of March 30, 1871, constitutes a contract on the part of the State which cannot be repealed by the General As- sembly, and the contract follows the coupons in the hands of the holders thereof , though pur- chased after the repeal of the Funding Act; and that the Act of March 7, 1872, which directs what shall be received in payment of taxes, dues, &c, to the State, so far as it respects the provisions of the Funding Act, in relation to the coupons of bonds issued under the Funding Act, is repugnant to the provision of the Consti- tution of the United States, which forbids a State to pass any laio impairing the obligation of contracts. The opinion of the Court was delivered by Judge Bouldin, whose arguments and authorities are conclusive ; there is no flaw in the chain of reason- ing, no break in the long line of prece- dent. Judge Bouldin first inquires whether the undertaking to receive the coupons for taxes, &c, is a valid legislative con- tract, upon sufficient consideration. The decision is that "the consideration, on the "part of the creditors, is, in fact, com- plied with by the surrender of their "bonds to the State to be cancelled; and "the State issues to them bonds, * * * "as agreed on, with the privilege afore- said of receivability for taxes, &c, "secured on the face of the coupons." Is this a contract ? In the language of Chief Justice Marshall, the Court say: "This is certainly a contract clothed in "forms of unusual solemnity. " The de- cision of the Supreme Court of the United States in the case of Woodruff vs. Trapnall (involving the receivability of bills of a State Bank for taxes) is cited, and the Virginia Court say: "Much more clearly "then is this (Coupon case) a 'case of con- " 'tract ichich could not be impaired by " 'legislation,' since here the State, not "indirectly through her interest in the "Bank, but directly and immediately, is "both creditor and debtor, and as such "enters into the agreement with her credi- tors set forth on the face of the coupons that "they shall be receivable in payment of "all taxes, debts and demands due the "State — that a debt of hers, past due, shall bs "received inpayment of a debt due to her." The Court held that by special legislation, 37 amounting to a contract, a subsequent leg- islature may be bound, as in the case of the exemption of property from taxation, and in charters of incorporation, where the right of amendment or repeal is not reserv- ed. An additional sanction to the present obligation is that receiving the coupons in payment of bills due the State is applying the familiar law of set-off, which is good against the State as between individuals. Moreover the State had in 1847 provided that certain claims should be received for taxes, and in 1856 treasury notes, receiva- ble, "by way of set-off,'' for all taxes, were issued. The Act of April 25, 18G7, made certificates for interest on the pub- lic debt receivable for taxes. (South Car- olina did a similar thing in the case of the bills of the Bank of the State, and of the Bills Receivable issued under the Act of December, 1865.) The Court justly say : "Xor do we think it a larger exercise of ' 'power (to temporarily appropriate in ad- vance a portion of the public revenue to "the payment of a debt of the State, past "due when the appropriation takes effect) "than the surrender forever of the right of "the State to tax the property and income "of great and wealthy corporations. On "the contrary we think the latter immea- surably greater than the former."' The Court further say that the objection that the Funding Act violates the constitutional provision that "no money shall be paid "out by the State Treasury except in pur- suance of appropriations made bylaw," (the South Carolina prohibition is, that ' 'no money shall be drawn from the Treas- ury but in pursuance of appropriations "made by law'') has no application to the cases before them, as by the equitable prin- ciple of set-off "the taxes are paid or ex- tinguished by the coupons without ever "going into the State Treasury, and conse- 11 "quently no money is actually paid out of "the treasury." But if it should be re- | garded as such payment, "the Funding | "Act would be regarded as an Act of ' "Appropriation."' "We give, in another ; place, some extracts from the opinion of the Court. Judge Staples dissented on grounds which, even if sustained, (ex- cept in the allegation that the Legisla- { ture, in passing the Funding Act, exceeded j its powers) have no bearing on the South Carolina Act, It is the practice of the Court of Appeals of Virginia to grant a re- hearing, if any one of the Judges who united in the decision is in doubt as to its j correctness. Xo such Judge was found, and the motion for a rehearing was denied by Judge Anderson, in an opinion as thor- ough and as cogent as that of Judsre Boul- I din. The coupons of the Funding bonds have, ever since, been receivable for all State taxes in Virginia. Xo way has yet j| been found (and probably the will was ] not wanting) to evade the decision of the Court. With the decision of the Court of Ap- peals of Virginia, based on the decisions ! of the United States Supreme Court, con- ! fronting them at every point, we do not see how the General Assembly of South Carolina can hope to prevent the payment of State taxes, from year to } T ear, in Con- solidation coupons. The General Assem- bly can make work for lawyers, and plunge the State into a sea of litigation ; I but the} 1 " cannot deprive the holders of j coupons of their right, under a valid legis- j lative contract, to have the coupons received " in payment of all taxes due the "State during tJie year in which they mature, "except for tax levied for public schools. " The effort to violate the contract will be !| distressingly costly, and, as an indication ; of want of public faith, injurious in I the extreme to every citizen of the State. AN INSTRUCTIVE DECISION. CAN A STATE BREAK A CONTRACT WITH ITS CREDITORS ?— THE OB- LIGATION TO RECEIVE COUPONS FOR TAXES, AS PROVIDED BY LAW, CANNOT BE IMPAIRED BY ANY SUBSEQUENT LEGISLATION— A CO- GENT ARGUMENT LEADING TO A JUST CONCLUSION— RELIEF FROM PECUNIARY PRESSURE TOO DEARLY BOUGHT AT THE PRICE OF VIOLATED FAITH. The following extracts are made from the decision of the Court of Appeals of Virginia in the matter of the receivability of the coupons of State bonds for taxes: The first and all essential question is, was there a valid contract between the State and her bondholders ? ■x- * * -x- -x- * A large proportion of the creditors accepted the terms proposed, (in the Funding Act of March 30, 1871,) received the bonds of the State for two-thirds only of their claims — re- ceived certificates as aforesaid for the remain- ing third — and surrendered their old bonds to to be cancelled; and the question is, whether the undertaking by the State set forth in the coupons issued under the act, that they should be "receivable at and after maturity for all taxes, debts, dues and demands due the State," is a valid legislative contract upon sufficient consideration ? Were it a contract between individuals, the mere statement of the case would suggest the answer. To illus- trate: A and B owe to C a joint debt, but in unequal proportions as between themselves. B leaves the country, and the pecuniary condi- tion of A, and the circumstances of the case, make it reasonable, in A's judgment, that he should propose a separate adjustment of the amount due from him as between himself and B, and as part of the arrangement, proposes, as agent and trustee, to collect for C, B's proportion of the debt. C accepts the propo- sition, takes from A his individual bond for the principal and interest of his part of the debt, with largely extended credit; takes his undertaking in writing, as agent and trustee, to collect, if practicable, and account for B's proportion of the debt, and surrenders to A for cancellation the joint bond of A and B. Is there an intelligent judicial tribunal on earth that would, for a moment, tolerate the de- fence by A that his bond was without legal consideration ? We think not. The surren- der alone by the creditor to the debtor of a bond or note to be cancelled, constitutes, of itself, ample legal consideration for its re- newal, with all arrearages of interest added, and is a daily transaction between individuals. A fortiori, is there ample legal consideration, when other considerations, involving princi- ples of compromise, enter into the adjust- ment; when one-third of the principal and in- terest is temporarily or permanently abated, and when the new bond is taken for only two- thirds of the debt ? Such would certainly be the case on such a contract between individuals; and what is a valid consideration between individuals is alike valid between the State and individuals. We have never had in such matters one code of law and morals for the State, and another for individuals; the same laws govern both. THE ADJUSTMENT IS A CONTRACT. Authority on the question whether the ad- justment we are considering is a contract — and a contract on sufficient consideration, would seem to be scarcely necessary; but the case of State of New Jersey v. Wilson, 7 Cranch's R. 154, involving in substance the same question, is directly in point. * -x- * * * * Now, it will be seen on examination, that all the requisites of a contract referred to by Chief Justice Marshall in the case of State of New Jersey v. Wilson, exist in the cases un- der consideration. The subject matter was an equitable adjustment of the State debt under the novel and anomalous condition in which the State of Virginia was placed; so that complications with West Virginia might be avoided, and the amount for which Vir- ginia was willing to be held directly bound to her creditors might be distinctly ascer- tained, and her bonds given for that amount, in lieu of the old bonds; "a proposition to this effect is made— the terms stipulated— the con- sideration agreed upon; which is" the issue by the State of the bonds and certificates aforesaid, with the extepded credit thereby secured to the State, and the further consid- eration of the surrender by the creditors of their old bonds to be cancelled. The consid- eration on the part of the creditors is, in fact, complied with by the surrender of their bonds to the State to be cancelled; and the State issues to them bonds and certificates as agreed on, with the privilege aforesaid of receiva- bility for taxes, &c, secured on the face of the coupons. Is this is a contract? In the language of Chief Justice Marshall in the case just referred to, we 39 say, "This is certainly a contract clothed in forms of unusual solemnity;" and like the privilege of exemption from taxation in that case, the quality of receiva- bility in payment of taxes and other dues to the State, in these cases, is annexed not to the persons of the holders, but to the coupons themselves, and follows them wherever they may go. OTHER DECISION'S OF THE UNITED STATES SUPREME COURT. The United States Supreme Court held (in the Ark. Bank case) that the legislation afore- said making the notes of the bank receivable in payment of debts to the State constituted a contract between the State and the holders of the notes, which was binding on the State. Woodruff vs. Trapnall, 10 How. U. S. R. 190. Judge McLean, delivering the opinion of the court, said, "The entire stock of the bank is owned by the State. It furnished the capital and receives the profits. And in addition to the credit given to the notes of the bank hy the capital' provided, the State declares in the charter they shall be received in all pay- ments of debts due to it. Is this a contract ? A contract is defined to be an agreement be- tween competent parties to do, or not to do, a certain thing. The undertaking on the part of the State is to receive the notes of the bank in payments from its creditors. "This conies within the definition of a con- tract. It is a contract founded on good and valuable consideration — a consideration bene- ficial to the State, as its profits are increased by sustaining the credit and consequently extending the circulation of the paper of the bank. "With whom was this contract made 0 We answer with the holders of the paper of the bank. The notes are made payable to bearer; consequently every bona fide holder has a right, under the 28th section, to pay to the State any debt he may owe it in the paper of the bank. It is a continuing guaranty by the State that the notes shall be so received. Such a contract would be binding on an in- dividual, and it is not the less so on the State." Ibid, p. 205-6. "The guaranty in- cluded all the notes of the bank in circular tion as clearly as if on the face of every note the words had been engraved, 'This note shall be received b}~ the State in payment of debts.' And that the Legislature could not withdraw this obligation from the notes in circulation at the time the guaranty was re- pealed, is a position which can require no argument. Any one had the right to receive them and to test the constitutionality of the repeal." Ibid, p. 206. All this reasoning applies with full force to the contract under consideration. Indeed, the contract in the cases before us stands on higher ground than that in the case of Wood- druff vs. Trapnall, in this: that here the State is herself both creditor and debtor, directly and immediately. It is her own debt, and not the debt of an insolvent corpo- |' ration which she has contracted to receive. And it stands on higher ground in this also— that here the receivability of the coupons in payment to the State is engraved on the face of each I coupon, whereby - the State makes known to every one who may desire to acquire them that they will be received in all payments to j the State, and thus invites him to take them; whereas, in the case of Woodruff vs. Trapnall,' although the same right was secured by law, yet it did not appear "on the face of the notes. And furthermore, the consideration in this j j case is more valuable and beneficial to the j| State than that in Woodruff vs. Trapnall, be- cause here the State secures a temporary or : permanent abatement of one-third of her debt, j| and a credit of thirty-four years on the resi- due. If then the contract in Woodruff vs. Trapnall be a contract on good and sufficient consideration, and binding on the State, a j multo jortiori would the contract here appear :[ to be on good and sufficient consideration, and binding on the State. It is true that four of the judges dissented in the case of Woodruff vs. Trapnall; but the i same question identically arose in the recent | case of Furman vs. Xichol, 8 Wall. U. S. R. I 44; and the decision in Woodruff vs. Trapnall was reaffirmed by the Supreme Court without I I a dissenting voice. These decisions, made directly on the point, upon elaborate argument by "the Supreme ji Court of the United States— a tribunal which ii assumes to act, and has been generally re- || garded, as the appellate tribunal in the last j ; resort in such cases— would seem to be con- clusive of the question. BINDING SUBSEQUENT LEGISLATURES. But it is earnestly argued that it is not within the legitimate power of the Les;isla- I ture to make such a contract; that it would tend to trammel and embarrass the action of |! subsequent Legislatures— to deprive them of j! proper control of the annual revenue— and ! j might, by absorbing the revenue, substantially j i annul the taxing power, and put a stop to the ;| wheels of government. It is unquestionably true, that one Legisla- ture cannot, by an act of ordinary legislation, jj bind or control, in any manner, subsequent I Legislatures. Such acts of legislation are, || and of right should be, always subject to I amendment or repeal. But it is equally true, i that by special legislation amounting to a con- ; tract, a subsequent Legislature rnav be bound j It is bound irrevocably by a legislative grant' forever parting with the real or personal pro- perty of the State, which is held to be a con- : tract not to be impaired by legislation • by a temporary or perpetual exemption of specific ! property or interests from taxation: by a bond or certificate of debt issued bv the State for ii money loaned, or other good "and sufficient consideration; by charters of incorporation unless the right to modify or repeal them is || reserved by law, and by all legitimate Wis- 40 lative contracts. The exercise of such power in special cases, although necessarily control- ling, to a certain extent, subsequent Legisla- tures, has been always held to be salutary, and one of the "essential elements of sov- ereignty." The power exercised in the cases referred to, or in most of them, goes far beyond that exer- cised in this case; for here, no rightful power is surrendered, but simply a provision made for a debt. The annually accruing interest on the debt of a State is, in all well regulated governments, deemed an essential part of the annual expenses of government, and is always annually provided for. THE FAMILIAR LAW OF SET-OFF. To add, as an additional sanction to this high obligation already existing, for the purpose of securing its prompt and punctual performance, that coupons for interest shall be received as money in payment of debts due to the State, would seem ordinarily to be not only a very innocent, but a just and convenient measure; for it would prevent a double process of collection and payment, by applying to the State the familiar law of set-off, which is good between individuals; and, even as the general law now stands, is good against the State in any case in which she may happen to be a plaintiff against a person holding a debt of hers, past due. The set-off could be pleaded against her, and the courts would be bound to allow it. The rule, as we have said, is one of justice and convenience, and there is no good reason why, in cases like those under consideration, is should not with her consent, through her Legislature, be applied to the State. That consent has been given in these cases, and in giving it, the Legislature certainly did not act withont precedent. EXEMPTION FROM TAXATION A LARGER EXER- CISE OF POWER. Soy do we think it a larger exercise of power than the surrender forever of the right of the State to tax the property and income of great and wealthy corporations. On the contrary, we think the latter immeasurably greater than the former. That such powers may be legitimately exer- cised has been over and over again decided by the courts of the States, and of the United States; and in the face of the very argument now urged, over and over repeated, and as often overruled. In one of the latest cases on the subject, Home of the Friendless vs. Bouse, 8 Wall, U. S. R. 430, the Court, at p. 438, says: "The validity of this contract is questioned at the bar, on the ground that the Legislature had no power to grant away the power of taxa- tion. The answer to this position is, that the question is no longer open for argument here; for it is settled by the repeated adjudications of this court, that a State inay, by a contract based on a consideration, exempt the property of an individual or corporation either for a specific period or permanently. And it is equally well settled that the exemption is presumed to be on sufficient consideration, and binds the State, if the charter containing it is accepted," citing, in a note, numerous cases which we need not repeat. THE FUNDING ACT AN APPROPRIATION. As to the objection, that the funding act violates that portion of the tenth section of the tenth article of the constitution which provides that "no money shall be paid out of the State treasury, except in pursuance of ap- propriations made by law," we need only say, that it has no application to the cases before us. By the equitable principle of set-off al- lowed by the funding act, the taxes are paid or extinguished by the coupons without ever going into the State treasury, and conse- quently no money is actually paid out of the treasury. If, however, by legal intendment it should be regarded as such payment, then,, by like intendment, the funding act would be regarded as an act of appropriation. But we think there is no payment of money out of the treasury in the case; the taxes being inter- cepted by set-off. A VALID CONTRACT. Upon the whole, the court is of opinion, that the undertakiog on the part of the State in the funding act, as set forth on the face of the coupons issued thereunder, constitutes a valid legislative contract on good and suffi- cient consideration, that the said coupons should be received in payment of all taxes, debts and demands of the State; and that the obligation of such contract cannot under the State and Federal constitutions be impaired by subsequent legislation. That provision of the State and Federal constitutions which forbids the State to im- pair by legislation the obligation of contracts, has received mature consideration by this court in the recent cases of Taylor vs. Stearns, 18 Gratt. 244; and in the Homestead Cases, to be reported in 22 Gratt. 266. In deliver- ing the unanimous opinion of the Court in the last mentioned cases, Judge Christian says: "The inviolability of contracts, public and £>ri- vate, is the foundation of all social progress, and the corner-stone of all the forms of civi- lized society, wherever an enlightened juris- prudence prevails:" and we do not think he has attached an undue importance to this great principle. It must be preserved. THE REPEALING ACT VOID. The act of March 7, 1872, forbids the col- lecting officers of the State to receive, in pay- ment of "taxes and other demands of the State, anything else than gold or silver coin, United States treasury notes, or notes of the national banks of the United States," and re- peals "all acts or parts of acts inconsistent with that act," thus repealing, or attempting to repeal, that portion of the funding act which makes the matured coupons receivable in payment of all taxes and public dues. In the language of Chief Justice Marshall, in the 41 case of State of New Jersey vs. Wilson, "this contract is certainly impaired by a law which would annul this essential part, of it." We are of opinion, therefore, that the act aforesaid of March 7, 1872, is repugnant to the constitutions of this State and of the United States, inasmuch as it impairs the ob- ligation of the contract of the State with the holders of coupons issued under the funding act, as above set forth, and is on that account and to that extent void. THE SEED-TIME OF FAITH AND HO>'OR The court is sensible that a grave, respon- sible and painful duty will be cast on the General Assembly by "this decision, in the present impoverished condition of our people, but we feel assured that it will be faithfully and wisely met. We think with the entire court in the Home- stead cases, that temporary relief from pecu- niary pressure is too dearly bought, at the price of the violated faith of ^ irginia. She has just emerged from a terrible trial — an ordeal of fire — without a stain on her escutch- eon. Impoverished, crushed and dismem- bered, but not dishonored, she is now taking a new departure, and we would hope to see it in the right direction. In the language of a vigorous writer, "Xow is the seed-time of faith and honor. The least fracture now will be like a name engraved with the point of a pin on the tender rind of a young beech, the wound will enlarge with the tree, and poster- ■; ity will read it in full grown characters. !; This court is unwilling to inflet that wound. CAN SOUTH CAROLINA AFFORD TO REPUDIATE ANY OF- HER PRESENT DEBT! [From The News and Courier, January 14, 1878.] We have shown the relative advantages and disadvantages of different modes of adjusting, or readjusting, the public debt. We have shown the extent to which the settlement of the debt, under the Consoli- dation Act, was agreed to by the people. We shall now, in conclusion, inquire whether the people of South Carolina can afford to attach to themselves the stain of compulsory readjustment, or repudiation, even if, in morals, it-be defensible and, in law, it can be maintained. South Carolina, until her funded debt was multiplied by the Republican admin- istrations, stood high in credit as a bor- rower. Before the war South Carolina could obtain money in Europe, or at the North, as cheaply as it could be ob- tained by any other State in the Union. The notes of her leading banks passed current everywhere. Upon the name of South Carolina there was no blot or shadow. The utterances of her public men were pitched in the highest key, and the reputation of the citizens, the planters and merchants, for financial integrity, was as spotless as that of the State. South Carolina called for little for- eign capital in those bright days. Mil- lions that she did not need were laid at her feet. The ghost of this reputation remained as late as 1871. It is a well- known fact that the bonds issued when Scott was Governor found a ready mar- ket, selling for a time at 80, because of the confidence reposed in the faith and honor of South Carolina. Persons in the North did not pause to inquire whether the South Carolina of 1871 was the South Carolina of 1861 ; or whether the Legislature and State officers, by whom the bonds were issued, were truly the rep- resentatives of the taxpayers of the State. They knew the name and fame of South Carolina, and still had confidence and trust, the trust and confidence they possessed in the olden time. The State, in her need, may hold these persons responsible for their errors of judgment. The people of South Carolina cannot, will not, deride them or sneer at them, for clinging, to their cost, to their faith in South Carolina. And when the bubble burst, and the debt stood revealed as Pelion on Ossa, and six mil- lion dollars of obligations were sloughed off by the Republicans, under the Consoli- dation Act, the olden confidence in South Carolina was, in a measure, renewed. It was assumed that there was no doubt of the genuine character of the Consolida- tion bonds. The Democratic members of the Senate and House of Representatives voted for the Consolidation Act, and the people, year after year, acquiesced in it and ratified it. They who had bonds and stocks which were fundable under the Act, hastened, for the most part, to fund them. Others, who had had no confidence in the former issues, did not hesitate to pur- chase bonds issued in 1875 and 1876. The feeling of trust was strengthened by the course of the Hampton canvass. It was regarded everywhere, as an uprising of popular honesty against organized fraud. The Democratic party was pledged to abide by the settlement under the Con- solidation Act. Governor Hampton was known to regard it as the" best settlement 43 that, under the circumstances, could be made. It was a rude shock to the popu- lar mind when it was first hinted that an effort would be made to readjust the debt, and to repudiate a part of it. And it will be a heavy blow to those who revere South Carolina, who love her name, if the projects of a few rash and heedless politi- cians shall find favor in the General Assem- bly. Oh ! for an hour of John C. Calhoun, j when the public debt of South Carolina j shall be the subject of discussion within I the marble walls which have never yet I been sullied by foul repudiation at the i hands of Carolinians ! But we are not dealing with considera- tions of sentiment, or what may be ridi- culed as Quixotic notions of public honor and private faith. The ill effects of repu- diation will be direct and practical ! "We presume that it is known to the General Assembly that there is not money enough in South Carolina, in possession of her citizens, to feed and clothe the people and furnish them with necessary supplies from thb beginning of seed-time until the end of harvest, It is a fact. The calculation is, that the available capital in South Carolina, belonging to South Caro- lina, is sufficient to put the seed in the ground. From that time until the crops are garnered the State is dependent on outside capital. Anybody who thinks for a moment will see how credit enters into the transactions of every individual, flowing in large streams from commercial centres like Charleston, and finding its way in trickling rills into every nook and corner of the State. Where are the planters, or farmers, or business men in South Carolina, who have, in bank or in securities that can easily be converted into money, the money wherewith to pay for all the labor they will need, and the supplies they will require, from this time until next November ? The members of J the General Assembly may profitably ask j themselves the question, How many of \ our constituents can do this ? And, mark you, every single person who cannot sus- tain himself, paying as he goes the whole year through, is more or less dependent on credit ! The cry is that the State does not need credit, and is better without it ! Are the farmers and business men better without it ? They depend on credit. The line is easily traced. The shopkeeper in the country who gives credit to the farmer is dependent on the credit he, in turn, obtains from the wholesale dealer; and the wholesale dealer, in South Carolina, is dependent, in turn, on the credit he en- joys in the North. So is it with bankers and factors, to a large extent. They can, by reason of their credit, borrow money in the North. This money they lend out, in the form of discounts and advances, in South Carolina, From the largest bank down to the humblest shop the kej'stone of the commercial fabric is credit. It cannot be doubted that credit in South Carolina will be impaired by any repudi- ation measure. The members of the General Assembly represent the people. They are supposed to be the faithful ex- ponents of the wishes and desires of their constituents, the people at large. The whole world will regard public repudiation as only one step removed from the re- pudiation of private debts. Indeed, pub- lic credit and private credit, where a government is representative, are abso- lutely inseparable. Individual credit was not seriously injured by the excesses of the Scott and Moses Adminis- trations, because they were not regarded as representatives of the propert}^ and character of the people. Now the Gene- ral Assembly — the Government — is known to be truly representative, and repudia- tion, by the Government, will deal a blow at private credit from which the State may never recover. Even if South Caro- lina capital, the money belonging here, be lent out as freely as before, and it will not, the merchants and factors will find it 44 more and more difficult to obtain the credit which they now receive. Let the members of the General Assembly ponder this one single question : What would be the condition of South Carolina if, for one year, the people could buy no single thing except for cash? It is no exaggera- tion to say that half the land now tilled would lie idle, and half the laborers now finding employment would remain without work ! To this appalling condition will South Carolina draw nigh, if credit be destroyed. This, however, is not all. It will not be denied, we presume, that South Carolina needs white labor and for- eign capital. With her present population the increase of wealth will necessarily be slow. There is so small a margin between expenses and income, that barely any ad- dition is made to the aggregate capital, year by year. We doubt that the State to-day is as well off, in point of money, as she was two years or four years ago. Mis- government is not alone responsible for our troubles. Honest government alone will not place the State on the high-road to prosperity. What a blessing would be the advent of ten thousand sturdy immi- grants, not paupers but persons possessing some means ! Such immigrants as these, whether from Old England or New Eng- land, will not come to live in a State which has branded itself as dishonest ! They will not expect the people to be more honorable, as individuals, than they prove themselves to be as an organized commu- nity. South Carolina must bid a long- farewell to immigration of the class de- sired and required, if the General Assem- bly be bent, at any cost, on repudiation. This is not all ! South Carolina needs capital for manu < facturing purposes. No State in the Union has better natural facilities. The labor is here, the cotton is here, the mine- rals are here, the fertile soil, capable of pro- ducing almost every known tree or plant, is here at our doors. Only one thing is needed to bring these elements of wealth into active use, and build up in South Caro- lina chains of villages like those which mark the thrift and advancement of New England. Here and there a mill is put up, and every one of them pays well. But we creep, instead of walking or running, so long as we depend on our own capital. Can South Carolina, alone and unaided, turn to full account the magnificent water power at Columbia alone ? Capi- tal from abroad we can get ; it was coming. The hydra of Repudiation, guarding the portals of South Carolina, will frighten away every cent of capital that was gravi- tating in this direction in search of safe and remunerative employment ! There is other trouble brewing. The old political issues are dead. There is little life in the effort to represent the South as craving a new rebellion. It happens, however, that as dangerous an issue as any of the old ones is rapidly growing in importance. During the Hayes-Tilden canvass, the cry was raised that the aim of the South was to reim- burse the Southern States, for their losses during the war, by securing enormous subsidies, and by enforcing payment for damage done by the Federal armies. It had little effect, at that time ; but the South is now seen ranged alongside of the West, opposing the resumption of specie payment, and seeking to pay, in debased silver, debts contracted for payment in gold or its equivalent, while State after State in the South seeks, on one pretext or another, to relieve itself of its debt and repudiate its obligations. The fear is growing that the Democratic party has discarded the lofty sentiments of by-gone days, and may become as reckless, where property and money are concerned, as the Republican party has been where the object was to retain and increase political power. Repudiation in South Carolina will place another feather on the back of the Democratic party. The strength of 45 the Democratic party is in the South, and what the South is the National Democracy must be, if the party is to he successful. Successful, however, no party can long be., in a State or in the Union, when that party is committed to repudiation of any sort or degree. It is a menace to property, and the party which is opposed by property cannot long hold dominion, even in a land where universal suffrage prevails. The scales can easily be turned. Once let it be known that Democratic ascendency im- perils property, and the Republican party will rapidly regain its lost vantage ground in the country. They who would loathe the Republican party, under all other circum- stances, would be tempted to cling to it, as the only means of saving themselves from loss or depreciation of property. It will be said, of course, that South Carolina does not intend to repudiate her debt; that readjustment is not repudia- tion: that the rejection of fraudulent debts is not repudiation ; that the rejection of bonds issued by Republicans is not re- pudiation, &c., &c, &c. This euphem- ism will serve in South Carolina; but it j will not serve beyond the State line ; and by j | the estimation in which our acts are held beyond the State, not by the name given them in the State, will our gain or loss be measured. We may protest and explain as much as we please, but the re- opening of the Consolidation Act and, the re- j jection of any of the bonds issued under the ActicHlbe regarded, as repudiation. South Carolina cannot separate herself from her 1 1 sister States. Fiscal secession is as im- practicable as physical secession. The most that can be saved to South Carolina, by the most violent of the schemes yet proposed, is a million dollars, sixty tliou- ) sand dollars a year. For this pittance South Carolina is asked to make herself a thing apart — a Pariah among the States — to smirch her good name, to destroy the credit of all her citizens, to place herself in a position where she must struggle along without the help ever ready to be given her. and that will be given if her sons are true to her and themselves, to her present necessities and the glories of an untarnished past. A SUMMARY OF FACTS AND CONCLUSIONS. [From The News and Courier, January 15, 1878.] We have endeavored, in preceding arti- cles, to give a clear exposition of the ori- gin, growth and character of the public debt of South Carolina, and to point out the manner in which the people have bound themselves, or are bound, to abide by the settlement of the debt effected four years ago. The articles have necessarily been long, and, in order to a better under- standing of the subject, we shall now give a brief statement of the conclusions to which we have come. 1. The Old debt of the State, already incurred when the Republicans, under the Reconstruction Constitution, came into oflice, was $7,262,231. This included, bonds and stocks $5,407,306, interest to October 31, 1868, $434,791, Bills Receiva- ble $160,000, and bills of the Bank of the State $1,260,134. For this Old debt the people were indubitably responsible, and its validity cannot be questioned. The public debt on October 31, 1873, was $15,851,627. On December 22, 1873, the Consolidation Act went into operation, and on October 31, 1876, the debt was $7,114,250. 2. The Consolidation Act authorizes the funding, at fifty cents on the dollar, of bonds and stocks to the amount of $9,886,627. The interest on these obliga- tions to January 1, 1874, is fundable at the same rate. Of the debt existing on October 31, 1873, Conversion bonds to the amount of $5,965,000 were repudiated by the Consolidation Act. They were "put ' 'upon the market without any authority "of law," and were "declared to be abso- lutely null and void." These Conversion bonds so repudiated comprise the whole amount of such bonds placed at any time, and in any way, in the hands of the Finan- cial Agent, H. H. Kimpton. 3. The debt outstanding on March 31, 1877, was $7,100,841, consisting of $4,398,290 of Consolidation bonds and stock,' and $2,704,551 of other bonds and stocks fundable, and not yet funded, under the Consolidation Act. 4. The unconsolidated debt ($2,704,551) remains to be funded at 50 cents on the dollar, together with $500,000 of interest to January 1, 1874, upon that debt. When the funding or consolidation shall be com- pleted the whole debt will be $5,998,565. This is $1,263,666 less than the Old debt in 1868, and $9,853,062 less than the total debt on October 31, 1873. 5. One proposed mode of readjustment contemplates the payment of the "honest "debt," dollar for dollar, and the repudia- tion of the "fraudulent debt," dollar for dollar. The "honest debt," otherwise the Old or Ante-Reconstruction debt, has been shown to be $7,262,231. About four mil- lion dollars of this amount have been con- solidated, and have borne interest on only one-half the original amount. Interest, therefore, must be allowed on two million dollars, at 6 per cent., amounting to $720,000; and interest must be allowed on the unfunded Old debt of $1,828,001, for the same period, amounting to $658,000. Therefore the total debt under the "dol- "lar for dollar" plan of adjustment will be $8,640,231. This involves the utter re- pudiation of the bonds issued for the Relief of the Treasury, for Interest on the Public Debt, and for the Land Commission, and, nevertheless, makes the whole debt $2,641,566 more than the whole debt will be under the Consolidation Act. 47 6. A second mode of adjustment is to recognize the Old debt as before, and to recognize the Republican or Post-Recon- struction bonds to the extent of the money actually received for them, by or for ac- count of the State. The amount of money so received is, at least, $3,838,716. This, added to the Old funded debt of $5,407,- 306 (exclusive of the unfunded Bills Re- ceivable and bills of the Bank of the State) makes the entire debt, without counting any interest on the Old funded debt, $9,246,022. The debt, by this mode, will be $3,247,357 more than under the [Consolidation Act. 7. A third mode of adjustment is to rec- jognize the Consolidation bonds and stocks | representing the Old debt, reject all other ! Post-Reconstruction bonds and stocks, and : complete the funding of the Old debt under the Consolidation Act. The Old debt ($5,407,306) with interest to October 31, 1868, ($434,791) and interest from July 1, 1871, when the payment of interest ceased, to January 1, 1874, not from Octo- ber 31, 1869, as erroneously stated in the article published on January 7, ($811,195) amounts to $6,653,192. Funding this at 50 percent., and adding $160,000 for Bills Receivable, and $1,260,134 for Bank of the State bills and interest, the debt is $4,746,- 730. This is more than a million dollars less than the debt under the Consolidation Act; but at what cost ? One half of the Old debt, for which the State received dollar for dollar in gold, is repudiated utterly, and no provision is made for any of the New debt. 8. Another mode of readjustment is to recognize the unfunded Old bonds, at their face value, and to let the funded Old bonds stand under the Consolidation Act. This bastard arrangement will make the debt about $3,000,000. It involves the repudi- ation of one-half of the principal and in- terest of the Old bonds, held by those who were willing to compromise with the State, in 1874 and since, while to the inexorable creditors who sullenly held aloof, trusting to the chapter of accidents, it makes pay- ment to the last farthing. 9. It follows that, as a matter of money, the settlement of the debt under the Con- solidation Act is far cheaper than any other proposed settlement of a non-repu- diating character. Moreover, it would be impracticable, in any plan of readjust- ment, to give the advantage of any better terms than those of the Consolidation Act to the persons, if any, entitled to that ad- vantage. At least one-half of the Consol- idation bonds and stock, it is believed, cannot be traced back to their original source. The State must give the holders the benefit of the doubt, and either prove the bonds to be bad or accept them as good. There is almost insuperable difficul- ty in the way of picking and choosing among the Consolidation bonds, and if it takes the State several months to deter- mine whether particular bonds are bad, how could a purchaser be expected to know their doubtful character ? 10. The Taxpayers' Convention of 1871 found that the public debt then was $9,865,908, and declared, by formal reso- lution, that this was "a valid debt," and that "the honor and funds of the State "are lawfully pledged for the redemption "thereof." While recognizing this debt, the Convention gave full notice and am- ple warning to the public that any bonds or obligations issued thereafter would be held to be "null and void." The public debt as recognized by the Consolidation Act was $9,886,627, being only $20,719 ! more than the debt recognized by the Convention. And in kind, as well as in amount, the debt recognized by the Con- vention is virtually the same as the debt recognized by the Act. The repudiation of the Conversion bonds, amounting to $5,965,000, brought the Consolidation Act, in respect of the amount of debt, into harmony with the declarations of the Con- vention. And the $9,865,906, without interest to January 1, 1874, so recognized in 1871, is reduced to $5,998,665 by the funding under the Act. 11. The different investigations made since 1871 show that the whole amount of State bonds alleged to be in any way fraudulent (now that the Conversion bonds are disposed of) is $2,200,000. This, without interest, is equal to $1,100,000 of Conversion bonds. The objections to the impugned bonds are, in many respects, frivolous, and every one of the objections has been cured by Act of Assembly, under the de- cision of the Supreme Court, or by the action of the people. 12. The settlement under the Consoli- dation Act was acquiesced in by the whole people in the campaign of 1874, when both the Republicans and the Inde- pendents (whose candidates for State officers were supported by the Democracy) were especially pledged "to maintain the "settlement of the public debt as made "last winter." In 1876 the State Demo- cratic Committee, by formal resolution, declared that "the State debt having been "practically adjusted by the Consolida- tion Act of December 22, 1873, and "most of the creditors having come "in, under that Act, we consider "the adjustment final, and pledge the "party to abide by it." And on Decem- ber 20, 1876, the House of Representa- tives, composed almost exclusively of Democrats, resolved that "we hereby do "reiterate in good faith our pledge to re- "deem, at the earliest practical moment, "the credit of the State, by the payment "of the matured interest on the valid, "legal and recognized bonded indebted- "ness of the State, as now provided by "law." The members of the House of Representatives on December 20, 1876, constitute a majority of the present House of Representatives. From the Taxpayers' Convention as to amount, and from December 22, 1873, as to character, the public debt, as fundable under the Consolidation Act, has been repeatedly ratified, and the settlement, under the Consolidation Act, has likewise been solemnly accepted, as final, by the Demo- cratic party and the people. 13. The bonds and stocks fundable, and not yet funded under the Consolida tion Act, amounting to $2,704,551, are entitled to be so funded on demand. The Consolidation Act was in the nature of a compromise with the public creditors, and the State cannot, with good grace, hold the consenting creditors, who have funded, to the terms of the compromise, if it deny the creditors who have not yet come in the right to fund their securities in like manner. 14. The coupons of the Consolidation bonds are by the terms of the Act, and as bearing the declaration on their face, receivable "in payment of all taxes due "the State in the year in which they "mature, except for tax levied for the "public schools." This constitutes a con- tract within the meaning of the Constitu- tion of the United States ; and the Supply Act of 1877 is repugnant to the Constitu- tion and void, so far as, in directing what shall be received for taxes, it excludes the coupons of the Consolidation bonds. The holders of such coupons can enforce their rights in the Courts. 15. Any reopening of the Consolidation Act, and the rejection of any of the bonds or stock issued under the Act, will be treated as repudiation outside of South Carolina, whatever polite name be given to the process within the State. Such repu- diation will be a blot upon the public honor, and injurious, if not destructive, to private credit. The injury to private credit will be felt by every citizen who is not able to pay cash for every thing that he needs, in business and for use. Repu- diation will, also, prevent the influx of immigrants, and drive away the capital now ready to flow into the State for em- -. ployment in manufactures, or otherwise. Moreover, it will give color to the danger- ous idea that the political supremacy of ' the Democratic party will make property insecure, and will encourage the general repudiation of public and private obliga- tions. To the facts and deductions thus sum- marized we have little to add. We have demonstrated that the settlement under the Consolidation Act is the cheapest that can be effected, short of a species of re- pudiation which, in rejecting some of the Old debt and the whole of the Xew debt, is inconsistent with the principles of its ardent advocates. We have shown that the Democratic party, the State, is bound to observe that settlement as final. We have made it manifest that, as to the j Consolidation bonds and stock, the State j cannot escape from her obligations, or \ impair her contract, whatever the action j of the Legislature. We have shown that ; the amount of debt tainted with fraud is, at an extreme estimate, insignificant in com- parision with the cost of the injury that r e pudiation will do the people of the State. As a matter of money, as a matter of honor, as a matter of law, the settlement under the Consolidation Act should be again ratified. Xo other course is con- sistent with what the Legislature owe themselves, the people and the Demo- cractic party. There is no doubt of the ability of the State to pay regularly the interest on the debt under the Consolida- tion Act. It is a small debt in proportion to the debt of other States. And, as a matter of fact, the poverty of the people is only an additional reason why the debt should be recognized and paid. Rich communities may sometimes, with safety, set the world at defiance. Poorer Com- monwealths cannot. South Carolina is too poor to afford herself the luxury of bad faith and repudiation. 975.7 0254 534262