The Louisianian. [volume] (New Orleans, La.) 1870-1871, 1871-04-09
STATE or Loun1AxA, ]
Executive Department
New Orleans, February %, 1871. J


Executive Department,
New Orleans February %, 1871.
To the Honorable President and Members Of
the Senate:
Herewith I return, without my ap-
prevail, an act entitled ian oct topromote
the interest of commerce by establishing
the Louisiana Warehouse Company, and
guaranteeing the bonds thereof"
1 have no special objection to this act,
in so far as it proposes to establish the
corporation to be known as the Louisiana
Warehouse Company, although it would
be much better that all such corporations
should be established under general
law. I cannot consent to sign the bill,
however, because it provides that the
State shall guarantee the principal and
interest upon one million, five hundred
thousand dollars Of bonds to be issued
by the company.
Aside from the constitutional obiec-
ZION which win urge, think this an
unwise measure. There can be no rea-
son given why the State of Louisiana
should indorse commercial paper to be
issued by the gentlemen who desi,e to
form this company, in order to set them,
up in an ordinary business In the past
the State has properly granted subsidies
and loaned its credit to corporations or
ganized to carry out important works
Of internal improvement and public util-
ity. Such aid was given upon the as
sumption that the entire State would be
benefited and enriched, and thereby the
taxation diminished; but this is private
enterprise, calculated to enrich the stock
holders in the concern.
1t is true that the work proposed may
promote commerce" by furnishing bet
ter warehouse facilities than the city of
Now Orleans now has; but this is no
more legitimate object of State aid than
every improved cotton press or corn crib
throughout the State.
When the bill first reached me sur
posed it provided for the States indorse-
ment of three hundred thousand dollars
of bonds; but upon examining section
four, find that the capital stock is fixed
at three hundred thousand dollars, which,
however, may be increased to five times
that amount by vote of the stockhold-
ers. Subsequent sections provide that
bonds may be issued to the amount of
the capital stock, and that after certain
security has been furnished, the Gov
ernor shall indorse upon such bonds that
the State guarantees to the holders
thereof the payment Of principal and IN
terest.
This is not good business TRANSACTION
on its face. If the company could fur
n sh good enough security to justify the
State in indorsing its paper, it ought to
be able to borrow the money it needed,
and which it proposes to raise upon the
credit of the State.
But the State has no adequate security.
That to be furnised may be worthless
long before the bonds mature, the ware
house company may fail, and the State
would have to pay the debt.
The Legislature is prohibited by the
constitution from mourning this iabil:.
ty. At the last general election an
amendment was adopted providing that
prior to 1890 the debt of the State shall
not be SO increased as to exceed twenty
five millions of dollars.
An examination of the financial reports
OF the Auditor and Treasurer, viii dis
close the fact that this limit has been al
ready reached. We now have debt of
$25, 00O,000. We can not increase that
debt without violating the constitution.
1t may be urged that an Endorsement BY
the State of bonds to be issued BY pr
vate corporation viii not create debt of
the State! think otherwise. Such an
Endorsement is absolute guarantee of
payment, both as to principal and inter-
est As guaranty, it is q contract hav-
ing for its consideration the public good
to be expected from the aid thus given.
Such q contract forms an irrevocable OBJ
legation of the State, and must be esti-
mated among her liabilities. If my in
depreciation is wrong, then the constitu-
tional limitation to which call your at
tention is useless and meaningless. It
was adopted in order to check the increase
OF the public debt at point beyond which
it can not be sustained without ruinous
taxation. Certainly we can not issue
Ckoko h. L. L. "A