ALABAMA. 



15 



of 11,166,000, issued to the South & North 

 Railroad Company ($720,000), the Grand Trunk 

 (X'j-JiMiiini, and the Savannah & Memphis 

 ($204,000). This was liable to an increase of 

 $:;I;.IHIO, due to the Savannah & Memphis, mak- 

 ing $1,192,000 in all. The commissioners pro- 

 JH,~C ( | that new bonds be substituted for these, 

 on tlie basis of fifty cents on the dollar, with 

 thirty years to run, and bearing interest at five 

 per cent. The third class of obligations was 

 di->i limited as the "contingent direct debt," 

 which amounted to $2,573,093, and consisted 

 of a claim of the South & North Railroad al- 

 leged to be $600,000 ; alleged balance due the 

 school-fund of $508,404 ; claim of W. A. C. 

 Jones, $150,000 ; notes executed by Governor 

 Li-wis to H. Clews & Co., $299,660; bonds 

 hypothecated by Governor Lewis with H. 

 Clews & Co., $650,000 ; interest on the latter, 

 $130,000; balance claimed by II. Clews & Co. 

 as due on account current, $235,029. The first 

 two items are dismissed as forming no part of 

 the bonded debt, and the claim of Mr. Jones as 

 not sufficiently investigated. The transactions 

 with H. Clews & Co. were characterized as 

 anomalous, and the conclusion was- reached 

 that the State was only liable for $310,000, with 

 interest, formerly due to Clews & Co., but for 

 which there are now several claimants whose 

 rights must be determined by judicial proceed- 

 ings. The fourth class of obligations consisted 

 of bonds indorsed for or issued to railroad 

 companies, and amounted to $11,597,000 of 

 railroad bonds indorsed by the State, and 

 $3,024,000 of State bonds loaned to railroads. 

 The policy which granted State aid so liberally 

 to railroad enterprises at a time when the 

 people were impoverished was severely criti- 

 cised, and it was proposed that all claims on 

 that account be settled by compromise. In 

 place of the liability on account of $4,720,000 

 indorsed bonds of the Alabama & Chattanooga 

 Railroad, and $580,000 of the same claimed as 

 an over-issue, $1,000,000 State bonds were to 

 be substituted, having thirty years to run, with 

 interest of two per cent, for five years, and 

 four per cent, for twenty-five years, and renew- 

 able for thirty years at five per cent, at the 

 option of the State. There were also $2,000,000 

 bonds of the State which had been loaned to 

 the same company. These it was proposed to 

 retrieve by a sale of the lands mortgaged to the 

 State to secure their payment. With regard 

 to the liabilities on account of bonds indorsed 

 for or loaned to the Montgomery & Eufaula, 

 East Alabama & Cincinnati, Selma & Gulf, 

 Selma, Marion & Memphis, and the New Or- 

 leans & Selma Railroad Companies, the com- 

 missioners stated that there was important liti- 

 gation pending, and suggested that the holders 

 of the bonds might be convinced that their best 

 interests would be advanced by accepting a 

 transfer of the State lien and giving a full dis- 

 charge for their claims. The commissioners say, 

 after presenting this plan for adjusting the State 

 debt : " To recognize every claim preferred 



against the State would render the payment of 

 interest, to say nothing of the principal, of such 

 an enormous debt utterly impossible even at 

 a very low rate. It would be to acknowledge 

 an indebtedness equal to one-fifth of all the 

 property of the people and to provide for the 

 annual interest which would accrue would re- 

 quire a tax, if not inhibited by the constitu- 

 tion, which would be tantamount to confisca- 

 tion. It is apparent, therefore, that a just and 

 honorable compromise is indispensable. Un- 

 just claims must be rejected, and those which 

 are acknowledged must necessarily be reduced. 

 An act was passed, and received the ap- 

 proval of the Governor on the 23d of Feb- 

 ruary, with this title : " An act to ratify and 

 confirm the settlement of the existing indebt- 

 edness of this State, as proposed in the report 

 of the commissioners appointed under the act 

 approved 17th of December, 1874, and which 

 was communicated to the General Assembly 

 by message of the Governor of 24th January, 

 1876, and to carry said settlement into effect 

 by the issuance of new bonds of this State, at 



STATE SEAL OF ALABAMA. 



a reduced rate of interest, in adjustment of a 

 portion of said indebtedness, and the surrender 

 of certain securities held by the State in dis- 

 charge of another portion of said indebted- 

 ness." This authorizes the issue of $7,0t0,000 

 of bonds, to be designated as Class A, and to be 

 used in payment of the first class of liabilities ; 

 $596,000 of bonds, designated as Class B, to 

 be used in discharge of the second class of 

 liabilities above mentioned; and $1,000,000 

 bonds of Class C, to take the place of all lia- 

 bilities on account of the Alabama & Chatta- 

 nooga Railroad Company; $810,000 acknowl- 

 edged to be due to H. Clews & Co. is to be paid 

 out of proceeds from bonds of Class A. With 

 regard to the direct bonds of the State loaned 

 to the Alabama & Chattanooga Railroad Com- 

 pany it is provided that the liability of the 

 State on their account shall be discharged on 

 acceptance by the holders of the lien and right 

 of the State upon the property of the road. 

 The execution of this act is placed under the 

 supervision and direction of the same commis- 

 sioners who submitted the plan of adjustment, 

 viz.: Governor George S. Houston, Levi W. 

 Lawler, and T. B. Bethea. 



