Year: 1873

bonds and coupons of the State, being


under consideration, Mr.. Tillman said:


Mr.. Speaker: hardly think it probable


that anything may say on this bill will


change the determination of any Senator


who has resolved to vote for the bill. But


it is question of so much Importance, in


which Senators have shown so much feel


ing and earnestness that desire to give my


reasons for voting against the proposition to


fund the past due coupons of the State.


l shall not yield to any Senator in de-


sire to maintain the honor and credit of the


State, but there is an honest difference of


opinion as to the best method of accom-


plishing the end desired.


The advocates of this bill propose to


increase the value Of State securities and


the character of the State credit by renew


ing her obligations to pay and agreeing to
pay interest on the renewed obligation. l


have yet to learn that the renewal of note


without additional surety, increases the value


of the note, except in so far as the amount


of the Rote is increased. l


concedeI that the funding


OF past due coupons will be benefit to the


holders of those coupons, but this will not


necessarily improve the value or character


OF interest bearing securities.


The compounding of interest due one


man, tie increase of yonr Indebtedness for
| annual interest by one-fourth, does not and
cannot increase the value of the note paya-
BILE to another man, with whom no new
| contract is made.


| Appeals are made, on the sense of good
morals, and as a matter of good faith, which
| should govern between man ard man, that
when promise is made and there is fail
ure to perform the promise, then the party
| failing ought, if demanded by the other,
renew his promise and compound the in
| terest.


do not concede that there is either legal
or moral obligations resting upon an indi-
vidual or a State to pay interest on
interest unless it is especially pro-
vided for in the law or
contracted for in the promise. Since other
| Senators have alluded to what is right be-
tween man and man, it will not be improp-
er for me to say that l would not ask COM
pound interest from a struggling debtor,
| and if should, and that debtor should re-
| fuse to pay it, l would not consider it a
disgra ceful or dishonorable act, but a pru-
| dent one, which evidenced desire to pay,
al some time, all that he was bound legally
to pay.


The whole argument in favor of funding
| is based on the idea that we ought to do it,
| and the further idea that we cannot pay it
now without burdening the people with
| taxes, and it is further insisted that the
making of this new promise will place the
credit of the State on footing honorable
to the people of the State.


This is the whole of the argument elab-
grated by examples and illustrations of va
rious kinds, and appeals to do that which
| would be honorable between man aud man.
1t is perfectly clear that five millions at
| interest for forty years viii necessitate the
payment of twelve millions of interest and
at the end of that time the original five mil.
| lion will remain unpaid. Now, l ask if it
would not be better for the credit of the
| State, for tax payers of the State, and the
creditors of the State to provide for the pay
ment cf the interest on the sixteen or sew
enteen millions of interest bearing liabili-
ties, and levy an additional tax to discharge
our liability for the past due interest.
hold that it is as unjust to fix upon fl-
ture generations the payment of five mil
lions of interest, for which zoe are bound,
as it is to deny to the holders of this five
millions few years Of interest. As pure
matter of justice, these creditors had better
lose Cne million of interest, than wiring
from future generations twelve millions.
There is no reciprocity, no mutually in this
new contract which we are ask I'd to make.
The State has no assurance of any gain
from its completion, except further time for
making payment of a liability which it is
said we are bound TO pay n0,9, and which
ought to have been paid several years since.
No reduction of the rate of interest is
conceded in consideration of the promise;
not only is the letter of the bond demand
ed, but the spirit and implied meaning are
insisted upon, and we are told that it will
be dishonorable not to comply with the de-
mand.


The simple act of funding matured bonds
and past due coupons, will not affect bonds
not matured and coupons yet to fall due,
but the character and value of bonds not
matured may be increased by providing for
prompt payment of accumulati1g inter est.


The act of funding past due
bonds and coupons resembles the
act Of payment, about as much as the re-
fusal to fund resemol an act of repudia-
ton.


The refusal of this State to pay compound
interest is not an act Of reputation, it is
not dishonorable; it ought not and will not
diminish the value of our securities in the
money markets.


But if you will provide for payment of
interest which accumulates hereafter and
provide sinking fund for payment of the
past due interest, you will do more to help
the value of the seventeen millions not ma
tured than you can by making promise to
pay interest on twenty two millions, thereby
diminishing the ability of the State to pay
promptly the interest on what it is now le-
gally bound to pay.


l submit that it would be better for the
State and creditors of the State, to levy a
tax of so cents, three-fourths to be pay
able in coupons for period of |
four or five years, discharging thereby |
aceumulatiug interest and the five |
millions, which this bill would make prin- |
cipal, than to levy a tax of 40 or 80 cents |
for forty years and then leave to future gen.
erations debt of twenty-five instead of |
seventeen millions.


An additional tax of ten cents will be |
necessary to pay the additional annual |
interest which this bill will create and |
none Of the principal will be discharged,
while twenty cents additional will in ten |
years discharge both principal and interest |
Of interest is coUnted) of this five millions |
which you propose to fund.


The question then may be stated thus: |
Is it better to levy tax of 20 cents for ten
years, and discharge five millions of pIinci-
pal, than to levy a tax of 10 cents for 40
years and leave that i've millions still un-
paid.


If tax of 40 cents on three hundred |
millions will meet our liabilities after the |
passage of this bill, thirty cents will pay
interest on our maturing bonds; to which,
if you will add 20 cents, you will obtain
a surplus of six hundred thousand
dollars, which, if 10 interest is counted on
the past due coupons, will in eight years,
taking into account the increased value of
property, pay the whole of this five millions
of past due interest.


The opponents of the bill cannot be just
ly charged with being repudiationists, but
they claim the right, legal and moral, to
refuse to pay compound interest, and in
doing this, they but follow the example of
prudent individuals in the management of
their private affairs.


They do not propose, however, to leave
this Interest unpaid, but to provide for its
payment by the levy of small additional
tax, and we believe that this refusal will
render more desirable all State securities,
other than the past due coupons. In con-
cluei0n | Nqsirn fO COW tbaf / do not baliauQ |