“Interest unpaid during the war, accrued up to and including January 1, 1867, was then funded and new bonds issued for the sum of $621,000, which made the total bonded debt on
| January 1, 1867 | $4,066,000 |
| “The war debt, amounting to $12,094,731.95 was repudiated. | |
| “Eight per cent. bonds sold in 1867-68 | 659,100 |
| “Eight per cent. bonds sold in 1869-70 | 657,700 |
| “Total bonded debt January 1, 1871 | $5,382,800 |
“Cause of increase, sale of bonds to carry on the government.
“There is a prospective liability for an indefinite amount growing out of the passage of an act, approved February 19, 1867, and amended August, 1868, whereby the state is required to indorse railroad bonds to the amount of $12,000 per mile, which act was further amended in March, 1870, so as to increase the indorsement to $16,000 per mile.
“The same legislature in March, 1870, made a loan to the Alabama and Chattanooga Railroad Company of $2,000,000 in Alabama 8% bonds, over and above the indorsement of $16,000 per mile for the entire length of the road, thereby adding to the direct and collateral liability of the state for this one road the sum of $6,700,000. In addition to this, the Republican governor, W. H. Smith, issued to the road bonds to the amount of $500,000 above what the road could ever by any possibility claim under the law.
“The said road made default in payment of January and July, 1871, interest, which the state paid as its owner and creditor, $508,000.
“There are eight or ten other roads for which the state, under the law above referred to, is liable as indorser.”
The state auditor reported this summary of liabilities September 30, 1871:
| Direct indebtedness | $ 8,761,967 37 |
| Present conditional indebtedness | 15,420,000 00 |
| Conditional indebtedness provided by law | 14,200,000 00 |
Under Democratic administration, a committee of the legislature investigated the railroad deals and reported that “Two millions of state bonds which the law authorized the governor to issue in aid of said company (Alabama and Chattanooga) in sums sufficient to pay off the cost of having constructed a certain amount of road in excess of the state indorsement of $16,000 per mile, were issued in bulk, with reckless haste, and were hurried away to the money marts of Europe”; that “there has been no record kept by any officer of the state of the number and amount of the bonds issued or indorsed by the state in favor of the various railroads entitled by law to the aid of the state, except as to loans of bonds to the Montgomery and Eufaula Railroad Company, $300,000 in amount, and the indorsement of bonds in favor of the Mobile and Montgomery Railroad Company.”