The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1905-05-14

Wy p. q. HARDING, president of
Wv the First National bank of
Birmingham, in an article ap-
pearing in the New York Finaneier delves
into the history of Alabamas debt from
the year 1923 to the present day. and
cites reasons showing the judgment of
Governor Jelks rejecting all bids made for
the recent bond offering The article as
1t appears in The Financier follows
The first issue of bonds by the state of
Alabama was made in 1928. the amount
being 100000, redeemable in ten years, the
purpose being to provide for subsorip-.
ton to the capital stock of the State Bank
of Alabama. Other issues, partly for
banking purposes and partly for the con-
struction of railroads. were made in 1898,
1882 and at various dates thereafter. until
in January, 1898, the state had outstanding
bonds amounting to $13,S0O, 600, s., 900 600
having been issued for railroads and the
balance for banking purposes. In 1874 the
state bank and its branches went into
liquidation, its affairs being wound up
By d commission appointed by the COVER
nor. Atter this time the bonded debt of
the state was rapidly decreased the
amount outstanding in 1S47 being 50. 49,, 555,
and in November, 1858, "a, $4,000, and at the
outbreak of the civil war in 1861 s3,445, 600.
The interest on tins debt was regularly
paid during the civil war, the state ship
ping cotton by blockade to provide funds
in London for It's payment In 1868 at a
time when most of the property owners
of Alabama were disfranchised, the leg
islature voted to extend aid to all rail-
roads which might be built in Alabama, by
authorizing the endorsement of the state
on bonds in the sum to $4,000 TO $4,000
per mile. So RECKLESS was the administra-
ton Of the state franchises during this
period that an indebtedness direct and in
direct of more than sS0000OO0 had been
piled up by January, 1874, at which time
the state. of Alabama finally defaulted on
all of it's interest Having against this
vast Indebtedness a property valuation OF
only about $3.50. 600 600, the financial condi-
ton of the state seemed hopeless. The
election, however. in the fall of 1874 re-
suited in q political revolution and the
taxpayers once more came into power in
December of that year, when Governor
George S. Houston was inaugurated
legislature converting at the same time
with a majority In both houses In accord
with him. One of the first acts of the
new administration was to call a conVen-
ton to frame a new constitution, which
was duly ratified by the people in Novem-
Der. 1875. This constitution dealt particu-
larly with the financial problem, and, put
ting the state on a severely economical
basis prohibited debt making in future.
Commissioners were appointed to negoti-
ate with holders of the bonds, the bulk of
which had been issued without regard to
the forms of law and without consider
alton to the state, and negotiations were
carried on to such good effect that a
satisfactory settlement was made in 1876,
when the debt as finally adjusted and au-
thorized was fixed at $500 600, which bonds
now constitute the entire amount of so
called repudated obligations of the state
of Alabama. Since this adjustment inter-
est has been regularly paid on the recog-
nized debt and the credit of the state
has so improved that the bonds which
brought when first issued about 39c ON the
dollar, have sold as high as 49,
The present bonded Indebtedness of the
state of Alabama amounts to 50 1851 500, of
which amount $95100O bearing 4 per cent.
interest mature in 1920 1886, 600 bearing 4
per cent interest are due in January, 1906
and the balance, $7437,6OO, carrying per
cent. interest are redeemable in July, 1906
The governor recently invited bids for the
purchase of funding bonds of the state OF
Alabama to the amount of $2403,6OO, to
bear 315 per cent. interest and also called
for bids on the same amount to bear 3
per cent interest. These funding bonds
were authorized by acts of the legislature
of February, 1898. 1895 and 1899, which acts
authorized an issue of bonds for term