The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1874-10-09
THE FUNDING HoHsTRosITY.

plumes himself upon, and which he never iaiis
to refer to in his messages and letters with e1'
ultation and pride, is act No. OF 1874, COM
monty known as the Funding Bill
We propose, therefore. to review this much
vaunted act with great care, in order tna'
everybody may clearly understand its provl'
sions and thoroughly appreciate the sincerity
and honesty of Mr.. Kellogg.
The first section provides for the issue Of
SIS, OOO, 600 of bonds, payable forty years
from the LIST January, 1874, with interest at
per cent, per annum. They are to be issued
"for the purpose of consolidating and reduc-
ing the floating and bonded debt OF the State,
under the auspices of the Governor, the Lieu
tenant Governor, Auditor, Treasurer, Secre-
tary of State, and Speaker of the House, WHO,
together with fiscal agent, to be elected by
them as u yided II the second section, re
constitute !. board Of liquidation. The third
section provides that tho bonds, when signed,
shall DO exchangable for all valid outstanding
bonds, and all outstanding warrants, except
those issued to constitutional State officers,
etc.. at the rate of sixty cents Of new bonds
for one dollar of old bonds, and all valid war
rants. In case Of the rejection by the board
of any of the old bonds, or Of the funding by
the board of any illegal claim, legal provision
is made
Sec enacts that the proposed exchange
shall be effected in New York and New Or
leans. Sec provides that the new bonds
shall only be issued for the purpose OF ex-
change. Sec. 6 provides that notice of the
passage of the act shall be published. Sec. I
provides a tax of 81 mills on the dollar for the
purpose of paying the interest and principal
of the new bonds issued, but Of no other
bonds. Penalties are imposed upon all who
may divert the funds SO collected from the
legitimate channel Any surplus from year
to year to be used in purchasing and return
ing new bonds already issued. Sec. 9 pro-
vides that the old bonds and warrants e1-
changed, be cancelled and destroyed, as shall
also all new bonds purchased. Sec. re-
quires the Auditor to give detailed account
of the proceedings under this act in his next
report Sec. 10 provides that any judge or
other officer obstructing the execution Of this
act, or falling to pc form his duty Hereunder.
is liable to fine of $4,000. and imprisonment
Of five years.
Section II declares the act to be q contract
between the State and the holders of new
bonds. Section IL repeats and annuls all pre-
vious grants to corporations made by the
hot Tod
Section 13 enacts that prior to 1914 the State
debt shall notbe increased beyond SIS, DOC, 900.
and that the debt be reduced to that amount,
with an agreement to that effect with the new
bond holders Section IA torbids tax-col-
lectors to pay their collections to any person
but the State Treasurer. Section Is enacts
that all warrants issued prior to January LIST,
1874, shall be receivable for back taxes, from
the Oath January, 1874, unit. the LIST of July,
1874, will certain exceptions specified. Sec
ton 16 deprives judges of the power to enjoin
the payment of the principal or interest of
any of the new issue of bonds, or the collec-
ton of the interest tax, or to enjoin any tax
collector from receiving the warrants des-
cribed in section Is, in payment of taxes
Section II repeats all acts inconsistent with
this act and puts it into immediate effect The
act was approved January "a. 1874.
The ostensible purposes of this act are, i.
70 annul and render void the contracts be-
tween the State and the holders of its old
bonds, under which the bonds were issued,
and without the consent of such bondholders.
2. To repudiate forty per cent of the principal
of all o6tne old bonds, without discriminating
between the bonds of the series deemed legal
aid those deemed Illegal and heseaiter 10
pay no interest whatever except on the new
bonds that may be issued in exchange for old
ones. 3. To exchange certain outstanding
State warrants, amounting, according to the
Auditors last report, to s1,79O,753 3O,) for
new bonds.
OF tho old bonds issued 1928, 1872, 500 there
are ever SC, 300. 900 the validity of which is a
matter of SO much doubt that they ought to be
to Judicial inquiry before being al
lowed The law, however, confers on the
Board of Liquidation the power to determine
such questions in derogation Of the State Con-
which forbids the exercise of ju-
dicial power by any branch Of the State Gov
eminent but its judiciary. The Board has
already exercised this power, however, and in
reference to several Of the most Objectionable
of the series of old bonds.
The exchange Of outstanding warrants pro-
vided for in the third section Of the act, is
fragrant violation of that article Of our State
Constitution, adopted as an amendment there
of in 1870, which torbids any increase Of the
public debt beyond s25,OOOOO0. The actual
debt was then over So, 600, 900, and the con-
tingent liabilities more than s15,0OO,0 900,
making in all about $40, 500, 900. In 1871, in
a case involving the question under considera-
ton, the State Supreme Court decided, that
the State debt was then largely in excess of
$25 900, 900, and in effect, that all appropria-
~ l. $k1~ Co..