Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1869-02-07

| fore the Legislature OoCono law yVu
debt will be forty.five millions, and tn
annual deficiency over a million and
quarter of dollars. The committee hop
the Senate will profit by these figures
and make no more appropriations o
bonds, for the benefit OF railroads or man
uiacturing companies.
Now, what is the remedy? The com
mittee will venture a few suggestions
some OF which may not be strictly within
the matters referred to them, but they
are so intimately connected with them a;
to excuse the making Of such sugges,
| tiOnS.
And first, the suggestion made is
very important one, and easily applied
That is, make no more appropriations o
bonds do not increase your credit. Oul
bonds are now at discount of some
thirthy-three and third per cent. The
State is nol0 actually in need OF funds to
meet her current expenses. Indeed, but
for the liberality Of the banks, who are
her fiscal agents, the members Of the
Legislature could not draw their per
diem.
Let her now go into the market to Dor
row money on her bonds, and she can
only realize, on her six per cent. securi-
ties, sixty-six and two third CENTS in the
dollar, costing her on twenty year de-
benture, at rate Of eleven and half per
cent, and this because she has so extend
ed her credit by lending it to others.
She will have to borrow money in few
days or weeks to pay her ordinary ex>
penses, to an amount Of nearly million
of dollars; and to do this she must in
crease her rate of interest or issue a
million and a half of dollars, in six per
cent. bonds.
To illustrate the condition of her finan
ces, and the erroneous, if not ruinous,
policy of her legislators, let US apply the
principle to the case Of private citizens.
Suppose 4 man of large estate and in
good credit. He has needy friends who
want money and are unable to borrow it,
one from another. They call on their
wealthy neighbOr, and he lends them his
note to sell in the market, and they do so
at q discount of thirty-thre and one
third per cent, and are to pay the note,
interest and principal, at maturity. How
long before they would both become
bankrupt? A novice in finance could
answer the question. But suppose the
persons to whom the paper was lent
should fail to pay, and he should have to
meet these obligations himself, and have
to continue to do so until his own means
ceased, and he should have to borrow
money to pay them, would not any man
say he should at once refuse further loans
Of his credit? OF course all would say he
should. Yet this Legislature, with just
such a case before them-the State of
Tennessee being in precisely the conr
dition supposed-is impOrtuned by these
failing companies, and new enterprises to
further extend her credit to the amount
Of millions. The committee hope no
such thing will be done, but ali such ap~
plications will be rejected.
If we reject every application Of the
kind-every proposition, however spe>
eious, and by whomsoever made, some
good will have resulted Further: re-
peal all laws authorizing the issuance of
bonds to any railroad company, where it
can be done, or the committee believe
such cases arc within the legislative com
potency and thereby many millions may
be saved to the Treasury and the people.
Having done this, the Legislature has
only began its work. These recOmnen>
dations, if adopted and carried out, only
prevent the increase Of the State debt by
the repeal Of the law for the issuance of
bonds for new objects Of expenditures.
Bat something more must be done to re-
duce the present expenditures to the
amount of the receipts into the Treasury.
If this be not done, our State debt will
be annually increasing by the excess Of
expenditures over the income. This can
only be done by a sale of the roads of
companies who fail to pay the interest on
their bonds. This is absolutely necessary
in the opinion of the majority, if not Of all
the committee as the best means Of re
ducing to the receipts to the Treasury.
But how is this to be effected, and upon
hat terms are they to be sold, whether
for what the roads may be worth or will
bring in the market, or what they may
owe the State, or FOR the amount lOr
which the State may have mortgage?
The committee are OF the pi'ion Tor
reasons hereinafter shown that they
should be sold for whatever they will
bring, under the proceedings herein pro-
vided for, if near their reasonable value.
In the first place they can probably only
be sold after going into the hands Of a
Receiver, and a failure under his man
agement 10 pay expenses OF running the
road, and the interest on the bonds issued
to such company. In this view Of the
case, 1t is the interest Of the State to en-
force the mortgage, and, thereby, be re-
lieyed from paying the expenses OF run~
ming the road, or rather the difference be-
tween the receipts and actual OUTLAWS in
the management of the affairs of the COM
pany by the Receiver. This much the
State saves by a sale, and, in addition,
whatever the road may bring.
To illustrate the view Of the commit
tee, they will take the case Of the Nash
vile and Northwestern road. BY the
management Of this road under a Recei~
yer, it fails to make enough to pay re-
pairs and expenses Of running. By q sale
this item is saved. But the State has adj
vanced to that company four million, one
hundred thousand dollars.
Suppose you sell the road, the rolling
stock and other property Of the company
for ten thousand dollars per mile, you
save the expense Of running the road and
reduce the amount of State debt at the
rate of ten thousand dollars per mile.
You have reduced the principal, and, OF
course, the annual interest on the same
to the extent Of what the road sold for.
To appreciate this, We must bear 10 mind
the fact that the company did not pay its
| interest before it went into the hands OF
the Receiver, and has not since, and pro-
badly never will, and that the road is
constantly diminishing its value.
II is better, therefore, in the opinion OF
the committee, that such roads sell for
what they may bring than for the State
! 10 buy them in ct what her claim Is or ID
! rnn the same as her own. II she runs II
m the hands Of a Receiver, the commit
tee have shown it TO be n constant dralr
on the Treasury, AMI if purchased by
| IN. State the same drain will ContInnc
and the interests on the bonds be The
same as before the sale, whilst the road
by wear and tear, will constantly grow
| less valuable, for the iron on railroads
has 10 he replaced every eight years
! The committee have gone somewhat int
detail as the bill from the House Of Rep
| resentauges, providing for a sale Of rail
roads, contains such provisions.
In further illustration of the lmpollc.
Of buying the railroads by the State un