Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1872-08-22
SECRETARY States OFFICE,

Columbia, S. G., August 6, 1872.
Messrs. c. D. 4feAon and D. Z. COrbin, At
toraeys and Councillors at Laao.
GENTLEMEN Having been able to retain
your valuable services to show cause why a
peremptory nandamals should not be issued
by his Honor Judge S. w. Melton, on Wednes-
day next, August 7, to compel me to seal con-
version bonds, I desire to submit few rea-
sons why think such mandamus should
not be issued.
In November, 1870, I began to suspect
that the conversion bonds that had been sealed
by me were not being used for the purpose
for which they were intended, viz: in exchange
for any of the other various bonds that had
been issued, or certificates of stock, which
were to be cancelled as soon as exchanged,
and kept in the Treasury, as evidence Of the
conversion bonds issued in their stead.
I then endeavored to learn from the Treas
urer the purposes for which so many CONVEX
sion bonds were declared to be needed. He
replied that the finances of the State were
under the control of a Financial Board, con-
sisting of the Governor, Treasurer and At
torney- General and that it was not my prov
ince or right to know their action, except so
far as could learn them from the pub blic re-
ports they might make through the Treasurer
and Financial Agent; and that he thought it
was simply my duty to seal as many bonds as
they required.
| then communicated with the Attorney
General, requesting from him written opin-
ion as to whether had the power to require
from the Financial Board knowledge Of
their transactions, before should take the re-
sponsibility of sealing any more bonds. The
Acknowledgement gave the opinion that my
duty was simply ministerial; that had no
right to know the transactions Of the Finan-
cial Board and that it was my duty to seal
as any many bonds as the Treasurer, instruct
ed by the Financial Board, requested that
the Financial Board had the absolute and ex-
elusive control of the issue and sale or hypoth-
ecation of bonds, and the disbursement of the
proceeds of such sales or hypothecations.
Though I believe this opinion to be accord
ing to the letter of the law, it did not entirely
satisfy me, or convince me, that l had no re-
sponsibility in the matter, and therefore de-
termined to use my utmost exertions to learn
WueLueI my SuoplCioiIS, 40 w "ito oSeh'o"
to be the misapplication of conversion bonds,
were correct or not
During the legislative session of 1901,
a law was enacted to create what is known as
the "sterling funded debt" of South Carolina,
and board of five officers, called the "Ster-
ling Fund Board" IVES authorized to manage
the negotiation of these bonds, which board
consisted of the Financial Board referred to,
viz: the Governor, Attorney-General and
Treasurer, with the addition of the Comptrol-
ler-General and myself I then felt in bet
ter position to remove or confirm my suspi-
cions with regard to the use being made Of the
conversion bonds, and determined to use my
opportunity to the utmost. This loan, as
those who are acquainted with the law are
aware, was to consist of S6,000,000 Of bonds,
which were to be negotiated in London, and
the proceeds of the sale used in the purchase
of our other bonds at lower price in New
York, and thus prove a great saving to the
State.
This was one of the reasons given to the
Legislature to secure the passage of the bill.
In accordance with this law, I sealed 3d.
100000 of these bonds during the summer of
1871. then refused to seal any more Of these
bonds, as I inferred from a conversation with
the Treasurer that an effort would be made to
execute this law contrary to what conceived
to be the true purpose and intent of the law.
The Treasurer informed me that they, the
"Sterling Fund Board" had the authority to
use the proceeds of the sale of these bonds to
pay any existing public debt Of the State: l
further learned that the existing public debt
would probably be very large, perhaps the en-
tire amount Of the lan!-s6,000,0OO. This
statement astonished me beyond measure. 1
Immediately informed the Treasurer that
nothing should be done with the sterling loan
bonds except at full meeting called by the
President of the Board through me, the Sec
retary. I was determined to prevent, if pos
sible, what I conceived to be diversion Of
the bonds to purpose entirely different from
what was intended by the law.
On inquiry from the Treasurer, by what
method it was intended to apply the sterling
loan bonds to such purpose, 1 was told by
him that he proposed issuing sufficient con-
version bonds to cover not only all other
bonds and stocks that had ever been issued,
but also the "sterling loan bonds," and then
simply place them in the Treasury, and report
that they had been converted by the holders.
The conversion bonds could then be hy-
pothecated for loans by the Financial Board,
independently of the Sterling Fund Board, as
they (the Financial Board) claimed that they
had right to do, under the lien permitting
them to hypothecate any bonds in the Treasu-
ry, or in the hands of the Financial Agent,
where these bonds were, and the moneys thus
obtained used to pay off all debts hitherto au-
thorized by law. And thus, instead of the
sterling loan bonds being sold in London at a
higher price than they could bring in New
York, and the proceeds of the sale applied to
the purchase of our other bonds here. they
would have been simply exchanged for CONVEX
sion bonds which conversion bonds would have
been hypothecated forloans, and then forfeited
and sold, and the moneys thus obtained ap-
piled to the payment of all debts hitherto au-
thorized by law ; and they (the sterling loan
bonds) would thus have been an addition to an
alleged debt of between $4,000, 900 and $16,-
100000.
It perhaps would not be amiss here to state
that the Treasurer, or Financial Board, who
had possession of the sterling loan bonds,
amounting to s6,OOOOOO, meant to hypothe-
cate these bonds even as late as last March,
without the knowledge of the Sterling Fund
Board, as such, for loans, and was only pre-.
vented from so doing by the timely repeal of
the act and cancellation of the bonds by au-
thority Of the Legislature.
From November, 1870, to this period, (Au.
gust, 1917 sealed, under the advice given
by the Attorney-G General, sufficient conversion
bonds for converting the one million of seven
per cent. relief of the Treasury bonds, and
100000 of the Land Commission bonds, as
the Treasurer positively informed me that he