ALABAMA. 



ALABAMA. The political affairs of Ala- 

 bama during the year have been comparatively 

 quiet. The excitement attending the inaugu- 

 ration of Governor Lindsay, and the practical 

 transfer of authority from Republican to Dem- 

 ocratic hands, had subsided before the close 

 of 1870. The Legislature, which adjourned on 

 the 14th of December, assembled again on the 

 18th of January, 1871, and proceeded with the 

 business of the session. Meantime, an event 

 had occurred seriously affecting the credit of 

 the State. In 1867 the Legislature had passed 

 an act authorizing the Governor to indorse 

 the bonds of certain railroads which were in 

 course of construction, to the amount of $12,- 

 000 for each mile of road completed. Among 

 the lines benefited by this act was the Ala- 

 bama & Chattanooga, which extended from 

 Chattanooga, in Tennessee, to Meridian, Mis- 

 sissippi, a distance of 295 miles. This road 

 had passed into the hands of a company made up 

 of Northern men, and at the session of 1869- 

 '70 they induced the Legislature to pass new 

 acts, not only raising the amount of bonds sub- 

 ject to the indorsement of the State to $16,000 

 per mile, hut authorizing an issue of $2,000,000 

 in State bonds for the benefit of the road. Bonds 

 had been issued by the company and indorsed 

 by Governor Smith, in 1870, to the amount of 

 $4,000,000, and the $2,000,000 of State bonds 

 had also been issued. According to the terms 

 of the various acts granting this aid, it was 

 provided that the company should "deposit 

 with the Auditor of the State of Alabama, at 

 least fifteen days before the interest is due, 

 from time to time, upon the bonds indorsed as 

 aforesaid, an amount sufficient to pay such in- 

 terest, including exchange and necessary com- 

 missions, or satisfactory evidence that such 

 interest has been paid or provided for ; and if 

 said company fail to deposit said interest as 

 aforesaid, or to furnish evidence as aforesaid, 

 it shall be the duty of the Auditor to report 

 that fact to the Governor." The law goes on 

 to declare that "the Auditor is authorized, 

 and it is made his duty, to draw from the 

 Treasury any sum of money necessary to meet 

 the interest on any bonds indorsed by the 

 State, whenever said interest is not provided 

 for by the company, and to pay such interest 

 when due;" and "the Auditor shall report 

 thereon to the General Assembly from time to 

 time, and, in case the exigency requires, the 

 Governor is hereby authorized and directed to 

 negotiate temporary loans for said purpose." 

 The interest on these bonds was due on the 

 1st of January and the 1st of July. On the 31st 

 of December Governor Lindsay was notified 

 that the Alabama & Chattanooga Railroad 

 Company had failed to provide for the inter- 

 est accruing on the 1st of January. Mr. Stan- 

 ton, the superintendent of the road, claimed 

 that, owing to injudicious suggestions in some 

 of the public prints that these obligations 

 ought to be repudiated by the State on ac- 

 count of alleged corruption in securing the 



passage of the laws incurring them, he was not 

 able to raise money to pay the interest, and he 

 therefore called upon the Governor to make 

 the payment. This Governor Lindsay refused 

 to do, unless authorized and required to do so 

 by special act of the Legislature. Meantime 

 the coupons of the bonds went to protest, and 

 much alarm was created in financial circles 

 lest the State of Alabama should refuse to 

 meet her obligations altogether. Soon after 

 the reassembling of the Legislature in Jan- 

 uary, Governor Lindsay transmitted a mes- 

 sage to that body, setting forth the facts in the 

 case, and recommending that a joint committee 

 of the two Houses be formed " to inquire into 

 this whole matter before any final action is 

 taken thereon." "I do not desire the State 

 of Alabama," he said, "to manifest even a re- 

 luctance to meet her just and honest liabilities, 

 but I do insist upon her right and her duty, 

 both to herself and those who claim to be her 

 creditors, to institute this investigation before 

 she pledges her future. There is one course 

 which can be adopted with safety and justice 

 alike to the State and bondholder : that is, the 

 enactment of a law' providing for the transfer, 

 to the holders of the indorsed and the two 

 million bonds, of all the rights, liens, securities, 

 mortgages, assets, and property secured by 

 statute or in any other way vested in the 

 State of Alabama by said road, and to pass 

 such laws as will enable said bondholders to 

 prosecute the rights to which they are subro- 

 gated under such transfer, provided they will 

 release the State of Alabama from all liability 

 on said bonds." 



The Legislature took the matter up at once, 

 and the final result of their action was, the 

 passage of a law providing that "the Governor 

 be authorized and required to inquire into and 

 ascertain the amount of bonds issued and 

 loaned to the Alabama & Chattanooga Rail- 

 road Company, and of the bonds of said com- 

 pany indorsed by the State ; and, when such 

 amount is ascertained, the Governor shall 

 make provision by temporary loan, or from 

 money in the State Treasury not otherwise ap- 

 propriated, to pay the interest upon said bonds, 

 whenever the coupons attached thereto shall 

 be presented to him, or to any agent he may 

 appoint for that purpose : Provided, however, 

 That no interest shall be paid upon any of said 

 bonds not proved to have been held on Jan- 

 uary 1, 1871, by innocent and ~bona-fide pur- 

 chasers : And, provided further, That no inter- 

 est shall be paid upon any of said bonds in the 

 hands of the said railroad company, any incor- 

 porator or agent thereof, or merely hypothe- 

 cated by them, it being the object and intent 

 of this enactment to pay interest only to inno- 

 cent and ~bona-fide purchasers of valid claims 

 against the State." And also, "That, whenever 

 the Governor shall have paid any of said inter- 

 est, he may proceed under any of the statutes 

 providing a summary remedy in such case, or 

 according to any forms of law which he may 



