The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1879-09-10
THE STATE DEBT.
,ttaek of a Republican Journal on
the State Of Louisiana.
!. Endeavor to Make Political Cap
ital Out Of the Settlement OF Our
Debt Question.
fN. Y. Tribune j

raainly due To the issue OF bonds to raise
lands to build and repair levees, 10 ala ia the
construction OF railroads, and W pay me OF
dInary and extraordinary expenses % ehe
atata government. The bonds for ieyees af'a
railroads were issued with the appfos"' W.
10th political parties, and the Jaws a'''o.
which they were issued received the sD1fa "
Democrats as we'll as OF Repabhcals =" ~
LEGISLATURE The question Of usi'is ~ - 80
IF the state for these purposes vas he'o' ~
~. rded aa q rartisan one at that time. hut
IT was openly charged by thepoveiifoi = sho
utata TINT some OF the acts granting
state aid. which we're passed over BUS ve.o'
5uere carried by corrupt means. hels - ~
lie room 10 doubt that many Df THESE grams
upre Jobs, and that the Dond5 were iTauun-
lite authorized But for this on; political
rarsy was as much responsible as the other,
mi Il in certain that the Republican Cover
IN did All he could to prevent r.. Inc IRE
.msrt poIjtlcal disturbances In the state made
The execution OF the laws very difficult. and
~ thfs reason to have exceeded the amount
received from taxation.
Wits there is no doubt that the debt con
trantad within the first six years after recon-
.struGsion was extravagantiy large compared
Nth the benefits derived, it did not greatly
cveeed the State debt at q period long anterior
~ the rebellion. The amount of that debt
WA reported by the Secretary OF the Treasury
In 1872 In response TO o resolution OF Con-
gress. to be 523, 985,000. To this should be
added 1861, 900, on account OF United States
surplus revenue deposited with the State In
fss7. This would make total OF S2f ,622, 900,
q srTl only 81 378, 900 less than the debt Ia
1g74. which had been largely contracted 70
repajr the damages and losses OF the rebellion
In ts73 Louisiana proposed q compromise
nar and Offered tn fund the
debt in new bonds bearing per cent interest
for co per cent Of the face OF the old debt A
law to enforce this proposition was enacted n
January, 1874. This law evoked sharp erlti-
cisIp from the holders Of Louisiana bonds,
and In reply to letter from Gov. Kellogg *
planning the act and urging its necessity,
committee wrote, February 7, 1874 calling his
attention to the fact that while the rate Of
taxation In New York for State purposes was
Al mills, In Louisiana 1t was but Z31l mills.
Respecting the character OF the funding law
thecommittee said
tits simply proposition of a forced pnr
chase from present holders at thu rate OF sixty
cents on the dollar OF the outstanding obliga.
tions OF 81 commonwealth which, ~ the Gov
ernor has SO abundantty shown. ID perfectly
able to discharge those obligations In full. The
guilt OF such unnecessary and even WantoD re-
Dudiation would be- Utmost without parallel.
and we cannot believe that the citizens OF Lou
isiana will incur 1t. and thus destroy at one
blow well earnei character Ior serapu.nus
Tho law was carried into effect, notwith-
standing the protests OF the States creditors
and by this act, for which Democrats and Be-
pubcans were alike responsible, the State Of
Louisiana repudiated two-fifths OF it's debt,
and clothed itself with di5hOnor. The debt
thus scaled aud established was then de-
iclared by constitutional amendment, adopt
ed In May, 1874, to be 81 valid contract be-
tween the State and each and every holder Of
said bonds, which the State shall byno means
and In no wise impair an interest tax Of
five mills was also established by the c0Dsti-
ton.
In June, 1875, Gov. Kellogg reported the
amount Of the State debt to be $21 ,279, 900,
and the yearly interest charge 81 .05O,000. In
October, 1877, an as -ociation Of English cap
italistB proposed to lend the State $i2,g5O,00n
on five per cent bonds running forty-tive
years, Ii the State would call In and pay off
her outstanding debt. This proposition ap-
pears to have been called out by the express
Ions In favor Of further reputation, which
began to multiply 80 soon as the Nichols
governne nt was fairly installed. The offer
was not accepted.
A Constitutional Convention was called in
January, 1879, to meet at New Orleans ~
April, 1879, one OF the purposes being to re-
pudiate some more OF the State debt The
mere unauthorized avowal OF this purpose
caused O monetary panic and the suspension
Of several banks In New Orleans, even before
the Convention assembled These banks had
made heavy investments In Louisiana securi-
ties, In consequences Of the loud pro
LESSONS made by the Democrats when
they gained political control OF the
State, that It's credit should be pre-
served at any sacrifice. The refusal Of
property holders outside OF New Orleans to
pay their tax, and the apparent strength Of
the reputation sentiment In the dominant
party, sent Louisiana securities down on the
run, and impaired the capital Of some Of the
banks which had trusted to Democratic pro-
fessions OF honesty to such an extent that
they were compelled to suspend payment.
The strongest banks in the city we're only
saved from the same fate by hasty remit
tances from New York, In response to APP
peals by telegraph for aid. A good many
Northern and foreign capitalists We're as
much the victims Of misplaced confidence as
the New Orleans bankers Many of them
to hostility to the Republican State admins
tration, and that under the new regime tax
payers would promptly respond to the DE-
mands which all knew they We're fully able to
pay. Accordingly, Louisiana bonds, which
we're quoted at "a at the close OF Gov. Pack
ARDS administration, rapidly rose to 80. In
March, 1875 they had declined to 43, and in
July to 36. 1t has been discovered that hos
tiity to Republican administration was only
a pretense, and that the real hostility Of Lou
isiana Democrats Is to the payment Of their
honest debts.
Ia May. 1879, the State Auditor reported to
the Constitutional Convention that the
amount OF taxes collected from 1870 to 1878
was SIS, 3s9, 169, and the amount Of taxes due
and unpaid for the same period was SlI, 345.-
832, or about 50 per cent OF the amount levied.
The rate OF taxation had varied from 23la to
II mills. The committee on State debt In the
Convention presented a majority and mi
nority report. The majority report recon-
mended the reputation of all but $4,000 200
of the debt. The majority report advocated
the payment OF the entire debt, but recon-
mended that the interest be reduced from Z
to 4 per cent. On june 20 the Convention, by
a vote OF s. to %. limited the rate Of taxation
to ) mills for all purposes. At this rate it
would, of course, be Impossible to pay the
ordinary expenses of the State government
and have anything LETT with which to pay the
interest on the public debt.
This action was afterward raconsidered, and
the Convention adopted, July q, an ordinance
which is to be submitted to tt1e people fnr rat
ifcation. This ordinance, which Was passed
by vote of 73 to A. recognizes tie validity. OF
the consolidated bonds, but regulates sha in