New-York tribune., 1879-08-30
A La RI VI.

Alabama amounted to something over $6,OoOOOo,
not including about 500 900 of unpaid interest OF
a debt of about S13,O00,000 contracted in ald OF
the rebellion. The State had regularly paid tue III
tcrest on that part of the debt which was held
abroad during the war; Alabama was the only
Southern State which did this. An amount nearly
one-half as large as the above valid indebtedness
had been received by the State from the National
Government in the form of grants for educational
purposes and Of loan from the United States sur
plus revenue fund, the latter amounting TO about
$67OQ0O. This sum was made part OF the school
fund by State law. Those several trust funds
were described as educational fund indebted
ness" and formed part of the $4,000 first
mentioned. Respecting the educational funds The
Financial Chronicle June 10, 1879 SAID:
would be curious chapter in the political annals OF
Alabama If the secret history OF the squanderng of
these funds affecting individuals and the ge
era community could he mnutely and correctly traced
About ali that rsmains OF them is that Instead OF boing
profitable Investment in aid OF the people theY exis
in The shape OF heavy domestic dept suolccting the
people of Alabama to the paynsnt OF heavy adaonai
in order TO sustain tier eouC@tona' lhs1tdOhs
On the same subject the Controller Of Alabama
reported in 1851: perhaps Of all trust funds
none has been SO greatly mismaDaged rs the school
fund OF Alabama"
In 1868 when the reconstructed State Govern
ment began its operations, the state debt was re-
ported at $7,9O4. .399, the increase being mainly
due to tie issue Of new bonds FOR defaulted H.
terest large prospective increase OF the debt
had however been provided for by the Provisional
State Government, which lad enacted laws granting
aid 20 railroad companies to be paid to each as
certain number of miles Of railroad were
completed. This aid was in the form of bonds of
the railroal aompGnies Endorsed by the State. and
was seen by hen on the property Of the COM
pauy.
I 1913 tho direct debt OF the State including the
e-ueatIonal fund indebtedness, was $11, 1914 Ill,
...I 40 railroad Vt was $17.110,000. the latter
mc..Iing g., 800 0 n State bonds which had
been issued to certain railroads. T1e debt appears
TO have decreased during the next year, for The
FiauH.ial lsToaiclo of November IA. 1874 in an
edito article on State F1nances-Defaults and
Reso os" estimated the direct debt 50, 900 900,
and tie railroad debt at $12, 100000, making
total of s. 10000. On all but 100000 of this
the State was reported TO be in default on account
of interest. 1t was estimated that $S,OOO,OOO OF
the defaulted bonds were held bv foreign owners.
1t Is probable that this estimate did not include the
debt to the educational fund. In June, 1873, the
same journal, after remarking that "the exact
status and amount Of the debt are not KNOWN"
proceeded TO classify and estimate the debt as fol-
lows
Contingent S" debt railroad indorsemcnis. 9.69lOOO
Interest due and unpaid a'SS6 ~
Total $3l,e52OOO
The Montgomery (Ala.) advertiser, about the same
time, estimated the debt at $32 100000. In Janu-
ary. 1877, Tie Financial Chronicle prepared new
estimate of Southern debts. in which the total
amount of bonds issued by Alabama. and then out
standing, was placed at $25,464,470; amount
acknowledged" $12,574, $40. But Governor
Houston IN his message November II, 1878, re-
ported that the debt would amount to only
Sc, ,432, 500 after the readjustment operations
had been completed Tho process by which the
State got rid of one-hsf to two-thirds of its debt
without paying 1t may be briefly described:
l. In 1873 the holders Of railroad bonds indorsed
by the State, to the amount Of $4,76o.O0O, and
bearing per cent interest were induced to ex-
change them for 81, 1900 in bonds bearing
per cent interest in coin. In 1876 another "com-
promise was effected, under which the 81 10000
in 7 per cent coin bonds snrrondered In
exchange for $596, 900 In bonds bearing per cent
interest in currency. For three years the holders
had received no il terest.
H. In 1874 the State offered another "conpro-
mise" under which the holders Of S5,SJ0,000 Of
its indorsed bonds bearing cent interest were
to surrender the bonds and receive ia lieu thereof
81, 900 900 in bonds bearing . per cent interest
In 1876 the State consoated nearly half the inter
est on the 81 900 900 by reducing the rate from
per cent per cent for five years, per cent for
five years, 4 per cent for ten years. and per
cent for ten years 1t also repudiated all interest
accruing up to January l. 1877.
ILL., The State had loaned 50. .000, 900 of its
8 per cent bonds to a railroad company. In
December. 1874, tho State proposed to pay these
bonds by transferring to the bondholders its lion
on the land grant belonging to the company, which
was variously estimated at 100000 to 1000, 900
acres This proposition was reported to have been
accepted by tho bOndholders in 1876. but in the
statement gwen by The Financial Chronicle III jan
uary, 1877 this S2,000,000 loan is classed as
unrecognized By the State"
" The State had issued indorsed per cent
bonds to various railroad companies to the amount
of 81, ,705 900, and these also disposed of by
a refusal to recognize" them,
V. The direct bonded debt was scaled down from
T,4l6,S00 to $7,127,709, by which operation the
State robbed its creditors of $2S9.091 more.
From this it appears that the State of Alabama.
owing debt the principal of which amounted to
SOS, ,040, 40 and the unpaid interest on which TO
July /, 1876. estimated at $4,000 900, thus
pudiated $15,46G,09l of the principal and all of
tho interest TO July 1, 1876 More than THAI, the
interest ON Ss, 127.700 of the debt which is
recognized" has been reduced on the average 2l2
per cent year: and this in the thirty years during
which the new bonds have to run, will involve
further loss of than $6000.000 to the credit
ors of the State. This makes the total amount of
reputation by Alabama duriug the last five years
! about SOS, 100000.
For this dishonest action the Democratic party of
Alabama is directly and wholly responsible. That
party had sooner gained firm control of tho
| State than il began to attack the credit of the
| State, and to seek means BY which the payment