Year: 1868




to buy its bonds at two-thirds of their
value is unheard of. If 1t be creditable te
grab this million while our bonds are at 65
cents, why not sell out when we have goi
the price up? !


Why not refuse to pay The July interest
and put the bonds down before we bny
Why not let US bear as we'll as bull the mar
ket?


five continue to tax our people to their
utmost capacity, as we are now doing, and
pay az far and as fast as we can, it will
do more to enhance our credit than bor-
rowing money at ruinOus rates Of interest
and selling gold bonds to get up specula-
tion in our currency bonds. Let the Legis-
iature, when il assemblies this fall, lay hands
upon such railroads as fail to pay their in
terest, and dispose of them by sale, lease,
or in any other way that will relieve the
treasury. BY that time our receivers will
probably be rich enough TO take care of
themselves, and stockholders must meet
their fate.


MR.. wArsoN's ANSWER.


Mr. Watson ably defends his plan in.
reply to a communication in the Press
and Times of the 10th inst, over the
signature of "Tay>Payer." We are una
bic to present it entire, but the extracts
given below are sufficient to explain it ::


The best reply / can give to these mis-
and unfOunded insinuations
of "Tax-Payer" viii be plain and clear
statement of facts.


The Indebtedness of the State on the
bonds Issued by it to railroads and for other
purposes is about So, 100000 (thirty-three
millions of dollars). The semi-annual in
terest on this debt is very nearly one mil
lion of dollars. Most of this interest is
due from railroads, but owing TO the disas-
tiers Of the war, which have not been fully
repaired, and owing to the incomplete CON
di6on of many of them, they will fall short
of paying their semi-annual interest from
four to five hundred thousand dollars, and
the State has to make provision for this
amount. The last Legislature passed a new
revenue bin, which, when in operation, will
fully meet the deficiencies of railroads in
paying their interest, but the revenue from
this bill will not come into the treasury be-
fore the latter part of this year, consequent
ly tie State will have to raise about half
million of dollars to meet its July interest.


In order to accomplish this there are but
three courses to pursue. One is to acknOw-
ledge our inability to pay, and suffer our
debt to be repudiated. But this course will
certainly not have any serious advocates.


Another course is TO borrow money upon
the pledge of our six per cent. bonds. II
is we'll known that 20 borrow money upon
our sax per cent. .boIIds viii require plelgr'
of bonds double in amount Of the sum
borrowed. TO borrow five hundred thou
sand dollars would require pledge (as
collateral) Of one million Of dollars of our
six per cent. bonds. If there should be q
very severe pressure in the money market
at the time the loan fell due, the State
might be compelled to sacrifice the whole
million of dollars of bonds to pay its loan
of five hundred thousand dollars


IL is also well known that this loan coHld
not be paid ont of the revenues of the State
for 1868 or 1869, and probably not out Of
the revenues of 1870. The State would
then have to be in the market for nearly
three years, borrowing money from hand to
mouth, to meet its present July interest.


To borrow money upon pledge OF bonds
may be justified when the borrower knows
that he will have the means to pay the loan
at maturity. But for great State to hawk
its bonds about in the money markets of
the world, from day to day, for at least two
years, is wholly unheard of, is disgraeeful
TO the State, is exceedingly hazardous, and
utterly Tuinous TO its credit.


The only other course then to pursue is
for the State to obtain permanent loan to
meet the deficiency of railroads in July
next. To accomplish this have proposed
that the State issue gold bearing bonds,
having twenty or thirty years to run and
in five years at an interest Of
not over per cent, and that it also go into
the market and buy up at least one million
dollars of its six per cent. bonds, that being
the amount that fell due on the 7th Of
May last and / Jam also in favor of
buying up all the bonds Of the State that
will fall due in 1868, 1869 and 1870, which
is about 1851 $50, provided the bonds
can be bought at a profit to the State.
The purchase money to be paid by the
issuance and sale of per cent. gold bonds
at par. If the bonds should be bought at
their present market price, which is less
than 81 cents in the dollar, the million of
dollars would cost the State $670,OO0.


The S670,000 would have 10 be paid by
the Issuance of that amount of per cent.
bonds. The operation would,
in effect, be this, that the State would ex-
change million Of its per cent. bonds
for $670.O00 of its gold-bearing per cent.
bonds, which would be clear and certain
saving in the principal of her debt of
$3.50 600, and there would also be saving
in annual interest.


The per cent. in gold would now be
over that in currency, but of course when
gold and currency have the same value,
the Interest would only BET per cent. in
currency. Take the period Of twenty or
thirty years, the time which the bonds
would have TO run, and no one can believe
that the average rate Of interest on such
bonds In currency would be for that pc
Tiod Of time as much as per cent, but
put ii at per cent. the annual interest
then on the $1,000 gold bonds would be
SIS, 600


The annual interest on the million Of 6
per cent bonds bought up would be 500,
VuVf ~ Aiiat Ahcit Muuth bc ar duhbaA
saving in interest Of $6400, besides a
saving in principal of $4,000.





Nothing is. more common than for gov
ernmenis TO buy up their own bonds,
The United States bought up its bonds be
fore the war, and is almost every day in
market buying up its 7-30 boEds. The
State Of Tennessee has also been a constant
purchaser of its bonds, very much pre-
sumo to the surprise of 'TaT-Payer."
II he will look at article three, section
li0S Of the Code, he will find that the
railroads are required to pay two per cent.
per annum on the amount Of bonds issued
To them, and that this two per cent. is 10
be invested in State bonds, and thai the
Governor, Secretary Of State and President
of the Bank Of Tennessee are created a
Board Of Commissioners with express dl-
rection TO buy the bonds OF the State.


II this policy Of buying the bonds OF
the Stale is fraught with 80 much dishonor,
why has not Tax Payer" and especially
Why have not our legislators who are the
guardians OF The honor Of the State, re-
moved this blot long siRce2 The buying Of
State bands is universally recognized as a
proper and honorable policy, and why
should not the Board Of Finance carry ont
a +. d. 81 i. 90