The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1879-05-17
THE GEORGIA PLAN.

Il THE GEORGlA PLAN.
The state of Georgia having II debt Oh SoWU
900, overdue and bearing from u 10 10 perfen
interest adopted the novel plan, to ret rid q
the incubus, of offering for sale SS,0OOOOO q
1 per cent. bonds IN denominations Of 50 ant
$40, and 10 the surprise of her own state au
thorllics, found ready sale for them among he
own citizens 4 paper before Ms thus explain
the cast;
The process, OF Georgia, redemption wa,
simple one 1t was to issue bonds, not OF III
denominations Of $50, 500 $500, or $1,000
promising u high rate of interest IN gold ant
to thus appeal to the cupidliy of Wall stree
or London for means for the further cnsavo
ment of her pcOplc--no; ii was to issue BOND
for five dollars with coupons attached promlS
linr the payment of four per cent, interest an
Inually. and instead OF spreading the bond
ovor the face Of a large sheet OF paper she
printed them of the size and in the form anC
general appearance Of the legal tender money
of the United States. The proceeds OF these
small bonds are to be applied solely to the re
demption Of outstanding bonds which bear /
higher rate Of interest and are chiefly hclu ny
foreigners. Each bond Is evidence OF The
States indebtedness to the holder thereof iol
the face value and that of the coupons AT thcll
maturity. But they are of convenient size and
form for II circulating medium; and rs every
citizen knew that the coupons would be re
ccivablc for taxes due the State, the bonds were
eagerly sought for and went into immediate
use IA "A circulating medium. Every citizen OF
the State was willing 10 receive them III pay
mcnt of debt or in exchange for commodities
and the State thus receive them in exchange
tor the national currency with which TO pay
her maturcd bonds But beyond this the rate
OF interest was reduced to 1 per cent and made
PAYABLE not to wealthy foreigners, but to The
IMPOVERISHED citizens of the State. Georgia
thus became the savings bank of her freedmen
and poor whites, while the arrangement cna-
bed the planter 10 pay wages at the end OF The
month instead of serving ont, as wages, corn,
bacon, and store goods generally AT cXaggcrat-
cd prices.
When Mr. Garrard, young member OF the
LEGISLATURE and the author oi the bill which
has accomplished such bcnctlcent results, IN.
troduccl his scheme, it was denounced III New
York and BY all the organs OF the banking IN
tcrcst. north and south, rs wild, deluslvc, IN
constitutional, and generally dangerous. He,
however, saw that the pending question was
between financial reform ana financial rum
and reputation, and persisted IN prOCalmlng
his views TO Legislators and their constituents,
until finally the scheme was adopted. The Dill
became a law, and when the agent OF the state
went to New York to have the bonds printed,
Wall Street ntrrpOsed its good Offices, ana OIL
tercd to take the whole of them though the
rate of interest was but four per cent, and pay
able but once a year. That powerful interest
did not wish a. take such small bonds, 1t
proposed easy terms for those Of larger demon
nations, and it would have had the interest
payable quarterly or semlannually; but 1t
saw what would be the force OF The example II
such small bonds should be issued to the peo-
pie and finally agreed that if they could be
withheld from The people oithe State, ltwould
take the whole of them, small rs they were
and low as the rate OF interest.
Happily the question of the taxation OF such
bonds has already been decided The banking
interest WAS quick to bring the question TO the
attention of the Commissioner Of Internal Reeve
nue., who promptly decided that the five dollar
four per cent. bonds issued by the State of
Georgia are not subject to the tax o! 10 per
centum Us they bear interest and have coupons
regularly attached. If, said he, State can IS
sue Il $500 bond, 1t can issue one for 1--WE dol
lars and if the bonds happen to circulate as
currency, ii does not alter the fact And now
the most conservative statesmen OF Georgia
propose to enlarge the issue OF these bonds
and to redeem the whole heavy interest bearing
debt of the State, amounting to $S,OOO00o, in
low rate 81 coupon bonds all of which it is
now seen, will be taken and held in the State
The danger Is, that while this plan may
work well in Georgia, other states, less able to
take care Of such paper may rush INTO the
system, and soon the country will be Hooded
with currency rs worthless as the Michigan
wildcat or Illinois blue pup % years ago. We
notice a movement is already being made in
PENNSYLVANIA to convert her $40,OOO,0OO ofdebt
into a circulating medium of this kind, and
with such an example, the scheme will run
wild in "A very short time. However, 1t Will
make money plenty and "cheap" for a time,
and the spectators will be in their glory.