Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1858-09-06
The Finances OF Virginia.

deemable previous 70 1856. All such bonds
were issued prior to 1852, aud only the legal
per centase on these bonds can, under the
Law, be employed for their redemption. Ia
deed this state of things is rendered uecessa-
~ by the terms of the State Constitution,
according to which the Legislature is obliged
to set aside a yearly per centase on each Sc
parate debt, for its own extinction. The
money thus appropriated to the extinction Of
one debt, cannot be applied to the extinction
of another debt, any moro than to any other
unauthorized purpose. Ia other words, un-
der the Constitution, each debt created by
the State must be provided with q separate
sinking fuud, not OF all available for the ey-
~tinctioo of any other debt. The reason for
this Constitutional regulation is obvious.
The arrangement Is necessary to prevent a
,opfu.iou of accounts. If an opposite ar
rapeement we're permitted, We should have
one or two results tho one destructive of
State credit, the other involving financial
confusion. Suppose that the debt created
previousto 80 should be partly ex;ingaished
by the sinking fund now set apart for the OK
~tinction of the debt created subsequent TO
'52, the former debt would be rapidly paid
of, aud then the State would be Obliged to
Continue to set apart a per ceDtage Oh the ex-
tinguisned debt, for 40 uncertain number OF
years, or, in 1886, when the debt created
subsequent to 1852 shall become redeemable,
no sufi lent sinking fund will have accumu-
lated for its redemption.
Thus we see the explanation OF how 1t IS
that the Legislature have not permitted ana
could not permit, by the act OF 1898. the APP
piication of the entire amount of the sinking
fund to that part of the State debt which has
now become redeenabie.
Thus the duty Of the commissioner OF the
sinking fund ia unmistakcable, aud they
have strictly pursued the line of ofi ;ial Con-
duct prescribed by the statute OF 1888. Ihe
entire amount accruing from the public re-
venue and set apart for the redemotlon at
par Of the debt created prior to 1852, has
been so applied. The commissioners have
10 right nor power to apply the fund set
apart fer the extinction Of the debt created
subsequent to 1852 to the redemption OF any
debt whatever, at this time. 1t is contrary
to law for them to apply this part OF the
sinking fund to the redemption OF the last
mentioned debt, before such debt shall be-
come r~edeemable, i. 9. in 1886. Ii is contra
~ to both the law and the Consultation, for
them to apply the same fund at aoy time to
the extinction of the debt created previous to
1852.
Thus q certain proportion Of the sinking
fund is now accommodating in the hands OF the
commissioners, which cannot now be legally
applied to the extinction of any part or por-
ton Of the public debt. What shall they do
with It? The law provides that they must
invest it. How must this Investment be
made? The same law provides that 1t must
be made 10 the bonds of the United States,
or in the bonds Of other States, or 10 the
bonds of the State of Virginia, purchased at
the market price. Acting in strict oGedi-
ence 10 the law, the commissioners have To-
vested the per centage accrulng from the
public revenues and set apart for the future
extinction of the debt created subsequent to
1852, in the bonds of the State Of Virginia
purchased at market prices. This is all that
has been done. Aud this strict performance
Of an official duty, imposed by law, affords
the only prete1t for the ignorant complaints
which have recently been urged against the
com missioners of the sinking fund. Their
conduct is entirely irrerroachable.
We regret to say that We can present no
such perfect excuIpation 10 behalf OF the
Legislature of Virginia. And here we must
not be understood as intending more than we
sav. We are not driven TO confess that the
Legislature has in the matter repudiated the
liabilities of the State towards her creditors.
Our legislators have indeed provided that the
entire debt of the State shall be redeemed at
par whenever the ultimate period OF redemp'
ton shall arrive. This is all that stric, JUS
ticc to the creditor requires. But the course
Of legislation adopted ID unnecessarily IN
generous towards the creditor, and almost
equally ]ruinous to the State credit with III
justice itself.
The provision, that bonds issued prior to
1852, may be purchased for cancellation, at
the option Of the bondholder and the com
missioners of the sinking fuud, at e reduced
price, prior to the agreed time COR redemption,
amounts to nothing more than authorising
the State to trade upon the depreciation OF
her own credit, by purchasing her own bonds
at q discount. We are happy to assure our
readers tnst the practical operation OF the
legal provision last referred to, IS entirely
precluded by the fact, that the whole Of the
accruing revenue, set apart for the redenp-
ton Of bonds issued prior to '52, Is consumed
every year by the CONSTANT and rapid matuf-
ing Of bonds, which thus become redeemsb!e
at par.) And a minute consideration OF the
subject demonstrates the fact, that the other
provision for the investment Of the fund, set
apart for the future extinction of the debt
created subsequent to 1852, amounts, at last,
TO the same thing.
Now, although this course Of proceeding
leaves the creditor the option Of awaiting Ia
every instance, the maturity OF his bond,
which will insure Its redemption at par, al
though the creditor receives his pound OF
flesh" or something else In the place OF 1t, at
his option, this financial arrangement ~ust
be inridious to State credit. When State
OF cers are in the market, purchasing State
bonds at a discount. for the use of the State,
capitalists do not stop to consider whether
there may be excuse or Justification for the
transaction. They Immediately conclude
that bad faith or bankruptcy Is the motive OF
incentive. And the whole scheme Is unne-
cessary. If It is advisable, (~hicnlt is not,
that State bonds shall not De redeemed be
fore maturity, the State should DC precluied
from purchasing them before they are re
deem able, uhder any pretext whatever. Ii,
on the other hand, II Is thought best las
It certainly is) to accommodate a certain
class Of creditors, by allowing them to sell