The New York herald., 1879-01-06
SOUTH CARoLINAs INDEBTEDNESS.

THE STATE ENJoINED BY THE UNITED STATES
COURT FROM PAYING THE JANUARY INTEREST
ON ITS BONDED DEBT-NEw YORK BoNDHoLD-
ERs OBTAIN TIE INJUNcTIoN-FAcTs OF THE
CASE.
To THE EDITOR OF THE HERALD
Thai South Carolina defaults in the payment of the
January interest on its acknowledged debt is not
much the fault Of the State of the holders of its
ltigated bonds. The Treasurer has sufficient funds
with which to pay both the January and July
coupons. and would have promptly paid the former
the 1st inst had he not been enoined from doing
by order of the United States Circuit Court at
Charleston. This order was obtained upon the APP
plication of John b. Manning Of New York, aud
other holders of the South Carolina consols. which
have just been pronounced invalid by the Special
Bond Court.
FACTS OF THE CASE.
The facts briefly these:-ln june 1877. imme-
dately after the establishment in power of the Hamp
ton government. the General Assembly levied tax
to provide for the payment of the accruins interest
all Of the consolidated debt of the State South
Carolina consols. amounting to $4296,2s9, but post
poned the actual payment of the interest until Leg
islative commission appointed about the same time,
should have ascertaned what part of this debt was
valid and obligatory upon the State The proceeds of
this tax paid into the treasury and were there
when the commission made its report 10 the General
Assembly in February, 1878. According to this re-
port only sl577 s35 of the consos free from all
taint of fraud and valid. The General Assembly then
levied tax pro vide for the payment of the interest
accrung the whole debt IN 1875 but directed the
Treasurer to pay the interest on only the sl.57I
of uncontested bonds-payment of interest on the
manning 455 being postponed until the validity
of the same should have been finally adjudcated by
the courts.
ACTION OF THE COURT.
special court, consisting OF three circuit judges,
was organized for the adjudication OF this matter,
with an appeal from its decision to the Supreme
Court of the State and thence to the supreme Court
of the United states. This special court as Is gen
gated bonds 81 not valid obligations OF the
State. The taxes levied in 1877 and 1878 have both
been collected and paid into the treasury Out of
these proceeds the interest which accrued during 1877
and 1873 on the acknowledged bonds has been paid.
The General Assembly at it's late session, Decem-
bcr 187S instead of levying tax to provide for the
payment of this years interest in the public debt
directed the Treasurer to apply the above mentioned
residue to the payment of the 1879 coupons on the
acknowledged bonds and this would have been done,
we have seen, but for the injunction obtained by
Mr.. Manning and the other holders Of the htigated
bonds. They hold that the money in the treasury
that say the residue of the proceeds of the taxes
levied in 1877 and payment interest in the
whole public debt-cannot be diverted by the Cen
era Assembly from the purpose for which it was
specifically levied and collected, but must remain in
the treasury subject to the Anal adjudication by the
courts of the validity of the contested bonds.
Inc unlteu STATES court mas as aireauy saio' iuaue
an order temporarily restraining the Treasurer from
applying this fund 20 the payment Of the January in
terest on the recognized bonds.
TAXATION AVOIDED.
All this is very much to be regretted, and yet
hardly wonder that the members of the South
Carolina Assembly, sympathizing with the hard
ships Of the people knowing that this money was in
the treasury, and believing, as majority of them
conscientously do that it would never be needed for
the purpose for which it was levied chose to appro
pirate it to the payment OF this years interest on the
acknowledged debt of the State rather than impose
for that purpose new and unnecessary tax upon
the impoverished people of the State. The money
in the treasury, and the General Assembly, not
anticipating this late action of the bondhoders ap
propriated 1t to the payment of this years interest
1t seems that unfortunate mistake was
committed by the General Assembly. for not only
will the credit OF the State be unjusty affected by the
non-payment of the January coupons, but much in
dvidual suffering will follow this failure of the
State to pay these coupons. TAXATION.