The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1905-05-22
STATE DEBT.
Mr.. DuBose Writes in Answer to
w. p. @. Harding.


To the Editor of The Age Herald:
The brief "history of the bonded debt
of Alabama" now in circulation from Mr..
w. p G. Harding of the First National
bank of Birmingham, contains two i'm
portant assertions that ought to be well
understood among the masses for various
reasons. The taxpayers of the state ought
to own the debt of the state, which is
neither more or less than their debt, and
the circular of Mr. Harding is valuable
inasmuch as it simplifes the topic under
consideration and reduces 1t in plain words
to popular understanding.
Mr.. Harding shows that two-thirds of
the debt is In the nature of state aid to
railroads. The railroads that cost the
state, as evidenced by this debt, some
thing like 100000 one generation only
ago, are now assessed for taxes at say,
ten times the face of the state aid in the
premises. These figures argue for the
safety of the debt. and for the policy of
keeping the ownership in Alabama.
1t is a mistake, however. to say that
the railroad debt in its origin was a
usurpation of the legislature The legis-
lature of 1s65-67, which initiated the policy
of state aid to railroads, by endorsing
the first mortgage bonds of the roads,
in the life of Alabama. Waiter H. Cren-
shaw, Col. j. B. Bethea, William 0.
Winston, Newton l.. Whitfield, Gen. NJ j.
Bulger, Gen. w. II. Forney, Governor
Robert b. Lindsay, Lieutenant Governor
r. II. Moren, Capt. +. S. Ferguson, John
II. Bankhead and their peers were men,
bers of that body.
What was the situation? Something had
to be done to give assessable value to the
farm lands. The war had destroyed every
kind and description of property but the
land 1t was held by the Legislature that
the building of new railroads would en-
courage the production of crops and upon
the agricultural basis prosperity might be
restored. Who would build the roads? If
the state led off in building roads, capital
from without might be expected to resume
confidence and come into help. There
could be no risk to the state in the expert
ment for it had nothing TO lose 1t so
happened that the vast accessible mineral
wealth lay midway between the agricul-
tural fields, and railroad building must
unavoidably open both the agricultural
and the mining resources, each phenomen-
ally rich.
Governor Patton, democrat, approved
the act of February 10, 1867. pledging state
endorsement of first mortgage railroad
bonds without limit to the extent of $i2.
600 per mile to each completed twenty
miles of road. No mistake was made in
that act. On the contrary 1t was high
statecraft.
The state government thus so energetic
ally set in action, was abolished by Con-
gress. Another kind of state government
came In. and taking up the law of Feb
ruary 10, ran riot with the principle,
bringing shame and public disaster in
place of honor and prosperity.
The $60O0,00O about, of state debt now
representing state aid to railroads, is
sacred debt and represents an original
policy of government that can never be
assaled. The debt to that extent, at
least, is a monument to the virtue of the
people 1t is an everlasting testimony to
their indomitabe spirit amidst unparall-
eled disaster. They did the only thing
then left for them to do, and they have
reaped a splendid reward for their dar
ing In time of confusion. The people of
Alabama should own the state debt.
Mr. Harding says the current rates of
interest may be too high to permit a state
debt rate of 3lb to meet favorable con
sideration in Alabama.
Now If. say. $S000.000 Alabama bonds be
held in Berlin, Amsterdam, Paris, etc,
and the state sends to those points 312
per cent interest even annually, the state
is drained of that much active capital
every year. In practical effect, 1t is COM
pound interest we pay on our state debt
held so far away. Compound interest on
100000 at Sh for nifty years. the life
Of the bond. Is exactly s44679 4l48S. If we
keen the bonds at home. we pay interest
to ourselves. If the people of Alabama
pay 3 per cent interest on the bonds held
among themselves. and we account 1t az
simple interest only. In fifty years they
would pay to themselves only s2o,oo0.oOO
interest. Any modification of the condi-
tons stated would. of course. produce
corresponding effects
J. w. DuBOSE