The Montgomery advertiser., 1901-06-29

to make an exchange. And that other reaacn was this: Owing to the lam guage of the present Constitution de- clarinw that any increase of the bonded debt should be wholly void. these bond holders obtained an opinion from an able firm of lawyers of which re- member Mir. Hornhlower was at the head, that if you undertook an ex- change of these new bonds (the Gov ernor had them printed and proposed to exchange thenal and they said we do not know whether these exceed your present bonded debt or not. We sup pose they do not as you have no right to do it, but if they do they will be a nuility and nobody will risk an ex- change of a bond that is good for an uncertainty. Therefore under our pre- sent Constitution 1t was impossible to effect a refunding. I failed for these reasons. "A subseuqent legislature amended that act when Mir. Johnston was Chief Executive, practically an- nulling nearly all the conditions and making them fifty year bonds and turned him loose and he did not do 1t and I presume he encountered the same dificuity that found. So 1t seems to me that this refunding Is matter very much to be desired and offer this amendment not in any antagonism to the committee at all but In harmony with its declaration In favor of le- funding the bonds, but this is more epecific and directs what shall be done. Right preceding it in tllis very section we arc considering 1t declares that aEy new debt created. with the exceptions named therein. shall he wholly void and then puts in a provfso that the Gov erner may borrow $500. 900 to meet de- ficiencies in the treasury. Then it says the legislature may provide for refunding the bonds. With that dec;a- ration just preceding it that any addi- tional debt shall be wholly void and this declaration in the report of the Committee that the Legislature may have the power to refund, there seems to be a conflict, and I do not know what the New Yorks will say on that. This amendment cannot do any harm. It Is not in violation of or in conflict with the report to make it more specific as this first paragraph of the amend rnent l offer does, and whenever sec- ton Is passed if there is any conflict 1t can be easily accommodated to what has been done. Now is not this de- sirabie. What offer here is simply in aid of the proposition the gentleman make.
 Mr. Bulger-Is there any provision In the present Constitution or any propos- ed provision in the new constitution that prevents the legislature from doing just what you purport to have done?
 Mir. oates-Yes, sir. If the gentle man had listened te me he would have heard me say that under the present constitution I spent seysral days in Wall Street trying to effect this thing and the moneysd men obtained an opinion from a distinguished law firm at the head of which was Mir. Horn blower that it could not be done under the Constitution, that any new debt would be wholly void, and it would be so considered. and they would not make any trade or exchange. so that the Legislature under the present Con- stitution 10 hampered.
 Now this Committees report pro- poses to authorize 1t by saying that the Legislature can make provision for the refunding of the bonded debt. This first section Is sftnpU in aid of that declaration, making it more definite and not at all inconsistent with 1t, and to direct the legislat ature and the Gov ernor what to do in effecting this re- funding. Now what is this practical ly The new bonds proposed to be is- sSed are to run for fifty years. Of course the date of their maturity would be after every member of this conven- tieY1 has passed over the river and gone to his grave. It would come up far a subsequent generation to pay. A three and a half per aent-and if it is zs- certained to be practicable to negotiate them at lower rate. there is nothing to prevent the legislature from doing it. first put 1t in not to exceed four so as to allow them a fair latitude, but as 1t was thought by some that that would induce bon6hclders to lobby and try to get per cent and as l believe 1t prac- ticable to reund them at 1-e when they have long time to run, by con- sent changed that to 3 1-2. I presume every gentleman here knows that 1t adds considera biy to bond to have q longer time to run. Bonds bearing the same rate Of interest one Issue to run for fifty years and another issue to run for twenty years, the longer term bonds are worth considerably more because 1t is idle capital that seeks investment in bonds and they don't want to have to reinvest early, and the investment that lasts longest, with equal security, and looking alone to the security of interest on that in- vestment and freedom from taxation.
 Now. l have shown there is nothing in this inconsistent with the report of the committee. but that 1t will really 20 in aid of it making more definite directions to the Legislature in mak- Ing provisions for the exchange. There Is no conflict whatever.
 Now. gentlemen, is 1t not desirable? You make the calculation between the rate of interest paid at the rate 1t now bears and at 31-2 per cent. you will find there is a difference of Sl2e,00O a year. Is not that worth saving 10 the people of Alabama? It is cutting down their taxes that much. It takes time to get ready for such 6 transaction as this, and whsn you are dealing with movements nave to be slow and cautious. and you have to be more particular in your provisions than in transactions.
 No, I have briefly stated the object and purpose of offering that section. I have offered my amendment Severally because I did not know what would be the will of the Convention, and if the should only wish to deal with part of these propositions, they could easily do so.
 Mr. Harrison-I would like to ask the a question.
 Mir. OateS--Certainly.
 Mr. Harrison-Have you any doubt as to the authority of the Legislature under the article as reported by the and here read to refund ttis debt?
 MT. Oates-PossibIy they would have that right but the language which says that any new debt shall be wholly void