Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1875-07-16
OUR JULY INTEREST.
Treasurer Morrow On Tennessee's
Default.
Why the Legislature Is to Blame.

| tetest &pa the iiiootea iitprOiiabllitT OF our
/ being able to meet the January interest
The following interview was had with
State Treasurer Morrow, drawing out the
facts and figures Of the case and his views
thereon:
RepOIter-Dr. Morrow, you notice that
the newspapers in Tennessee are senerslly
| discussing TIE failure 10 pay the July in
terest, and that nearly all deplOre the de
| fault. You also observe that few rather
| intimate that the rate of interest should
not have prevented the borrowing of the
money. We would like to publish an au-
thentic account Of tie unsuccessful negO-
| tiatiOhs, If sou wOtiid he 50 kind as to give
the the facts.
Treasurer Morrow eannot undertake
! 10 ausHst Ter any one bit myself, and can
| say that had we needed only the money 10
pay July interest, and the next Janua-
| ny interest eOnld have been met, L should
not have stopped 10 count the rate of inter-
est, nor would any of the other officers.
In December last, when 1t became Deces-
sary tn bnrfoW fcf.thb Jahuary, 1875, inter-
est, we procured the money at a cost to the
| STATE of, say, 9 per cent, that being the best
We could do, the interest and commissions
amounting 10 between S and, 8 per cent.
The officers fell tint, in the a6sence OF the
Legislature, a default must not be allowed.
| When the Legislature met, it did not take
away the borrowing power, but did what
was equiyalent-it suspended the collection
Of taxes for six or eight months, and thus
rendered 1t almost impossible to effect any
loans, as in New YORK, fer example; loans
are not edsiiy made over four months, 6x-
IN, q Il Al.
duty Of the Legislature TO provide for the
July interest. Instead of doing so, they
deferred tax collections until November,
and threw a cloud over the borrowing
power-a clear majority of both houses
being opposed to this power to borrow.
RepOrter-HOW much would it have
been necessary to borrow?
Treasurer MorrOW-When July came,
there was absolutely no money with which
20 pa5 interest. If loans we're elected, It
was absolutely certain that we could not
| pay back the same under six to nine
months, and of the money borrowed in
| January for that instalment Of interest
| 100000 remained unpaid, which with, say
100000 borrowed for other purpOses,swell-
ed cur loan account to $4,000. We
needed TO provide for the July 10 interest
100000, making our loan account Just ST.
OOO,OOl. Had the collection Of the taxes
gone on as usual, It wonln have Been prae-
ticable 10 borrow even this large sum. be-
cause at the close of each month portion
Of the money borrowed could have been re-
turned. In this emergency, two of our
home capitalists offered the State 100000
at ten per cent on such time as was desira-
bic, and an effort was made, without sue
cess, in New York to raise the additional
SGOO,O00.
RepOlter-What, then, were the deter
mining reasons why the money was not
borrowed?
Treasurer MOrrOW-This money We could
not promise to repay under six 10 eight
months, and this fact, together with the
doubt as to the right Of The State COMP
trOlleE TO use AZ collateral eettain bonds In
his possession, defeated the loan, and the
default followed. Now express an opin-
ion not heretofore made public. namely
that had we borrowed 100000 and paid
the July interest, Ihe State could not, by
any manner Of means, by collections or by
lOlns, have paid the January, 1876, inter
est, and default at that time was bound
20 occur. Then why borrow In July, to
fail six months lateT9 Still the effort 10
pay was made. Twas opposed 10 a repiti-
tiOn Of the high rate paid in January, 1873,
because saw that default was inevitable
in January, 1876, and hence there was no
good sense in borrowing in July, especially
at high rate.
RepOrter-In case the July loan had
been effected, on what considerations would
yCu have based the prediction that a de-
fault in January, '7G, was inevitable?
Treasurer Morrow will give you the
figures, as we have made careful and per-
fectly reliable calculations on this viewpoint:
We have outstanding to-day of warrants 500. 200
We owe OF borrowed money and interest
on the same. 3oi 600
Between July and January next there
VIII issueof warrants (ssy)............. $4,000
Total ................s..s..-.. .S99OiUuo
Now, the warrants being receivable for
taxes and being at a discount, will neces-
SarIly come II payment Of taxes before we
eau hope 10 get any currency. Next, out of
the currency collections the outstanding
loans must be paid as fast as possible, so
that before We could hope to pay the Janu-
airy interest, we have 100000 of home
debt to pay; and had We borrowed 100000
with which to pay the July interest, then
the amount Of Indebtedness outstanding
before the January payment would be
Sl,69O,OO0.
RepOrteT-Well, how about our re-
sources?
Treasurer MOrrOW-Of the tax Of 1874
there remains 10 the debit Of the tax col |
lectOrs the gross sum of S442,2S4. Fpm |
this amount is TO be deducted their COM |
on all that has been or can be |
then all insolTencies, releases |
and land sales; so that after deducting the |
usual allowance for these items Of Is per |
cent. We have, as cOilectable, only $685. |
SS4, and cOllectable when? Why during /
the next three years, as the history Of the /
COmptroller'S Office will show. The |
COmpLroller's report QS75) shows the /
amount due from delinquent collectors and
clerks, prior to 1874 to be $4,000. This /
sum also covers commissions, insolvencies,
credits, etc, to a much larger
extent than Is per cent, as in case of
1874. It is entirely safe to say that the
amount reported (sT70, 1000 docs not repre-
sent over S3j0,OO0 Ofrevenue that can ever
be collected. Thus it will be seen that to
pay our debt of 100000, and the July,
1915, interest of 500, 600 we have the ar
rearages (cOllectable in the next three
years) above mentioned amounting to
S61S, SS4, and the tax of 1S75-Or as you
see here:
Loans and warrants to Jan. l, 1875 ....s $4,000
Money to pay July, ls75, interest ...... 100000
Money to pay Jan. 1876, interest ...... 100000
s2,39O,oOO
Total tax for 1873 ESTIMATED
same As 1870 ..............Sl,l $4,000
Total arrearages for lSI4 and
prior. bl6gboA /
Privilege tax, fS75.......... $4,000
Interest to be paid by sol
vent rOads-s............-.. loO'uOo-s2,4O4 ,oo4 |
Showing surplus assets...........s 14,SS4
Reporter-DOes this estimate deduct
.nything for the cost Of collecting the rev.
,nue of 1876?
Treasurer MOTow-NO; if deducted, it
would leave, instead ola surplus, an actual
leficit. The estimate also takes it for
,ranted that the entire levy Of 1875 can be
collected in time TO pay the January inter-
st, as well as the S6lS,SS4 of arrearages-
leither of which things can be accom-
,lished in any possible way. The entire
objections from July TO January ], 1876,
annOt possibly amount TO S7O0,OOO, and of /
his tWOthirds will be in warrants.
From the statement have made you see
hat it would have been almost a blunder
D borrow money 10 pay July interest and {
all in January, and that failure in Janu-
" next was a certainty. Had our col Z
lfprals been accantad for a .TulV loan thew [