“Resolved, By the General Assembly, that the Governor be requested to communicate by telegram, or by letter, with the gentlemen holding securities of the State, mentioned in his message, and request them to submit, on the earliest day possible, through him, to the General Assembly any proposition of adjustment and compromise, which they may desire.”
As the result of this resolution, a committee of the Legislature and a committee of the bondholders met and agreed to the following proposition: “That arrearages of interest to July 1, 1877, be added to the bonds, and that new ones for sixty per cent. of the total amount be issued, made to bear interest at six per cent., and to fall due in thirty years.” It was naturally expected that the Legislature would ratify the action of its committee. Much to the surprise of every one concerned, it not only rejected the proposition, but decreased the tax rate from forty to ten cents per hundred dollars, and thus made the payment of interest absolutely impossible.
Later in the year the bondholders presented a second proposition, in which they agreed to a scaling of the debt fifty per cent., but this was also rejected by the Legislature.
In 1879 a committee was appointed by both Houses of the Legislature to investigate and report upon the State debt. This committee, after taking a great amount of evidence, presented an elaborate report. Acting upon this report the Legislature passed a second bill, March 31st. It provided for the issue of bonds bearing four per cent. interest to be exchanged for outstanding bonds with the interest accrued thereon, at the rate of fifty per cent. on the dollar. It was not to become a law until approved by a vote of the people, and two thirds of the bondholders. The consent of the bondholders was readily obtained, but the measure was defeated at the polls.
A settlement of the debt now seemed hopeless. It was the chief issue in the gubernatorial campaign of 1880. The divisions of the Democratic party resulted in the election of the Republican candidate, Alvin Hawkins. The newly elected Legislature was also favorable to the bondholders. A bill was passed which provided for the funding of the outstanding debt at par, the new bonds to bear interest at three per cent., and the coupons to be receivable for taxes. The bill was signed by the Governor, and went into effect in April. It was regarded as a great triumph for the bondholders, but their rejoicing was short-lived. In a test case the courts decided the law unconstitutional, on the ground that the Legislature could not make a valid contract in which the coupons should be receivable for taxes for ninety-nine years. This decision reopened the whole question.
The defeat which the Democrats had suffered in 1880 served to unite them in 1882. Their candidate, W. B. Bate, was elected Governor. In his message to the Legislature, Governor Bate marked out a plan for the settlement of the debt which was finally adopted, by an act passed March 15, 1883. This act declares: “That the State will pay in full the bonds held by Mrs. James K. Polk, and all bonds held by educational, literary, and charitable institutions in the State; that it will pay in discharge of its just obligations, what is known as the State debt proper in full, less war interest; and that in compromise of the remainder of the debt, known as the railroad debt, it will pay one half of the principal and accrued interest by issuing therefor bonds of the State bearing interest at the rate of three per cent. per annum.”
CHAPTER VIII
RADICAL MUNICIPAL ADMINISTRATION
The “carnival of crime and corruption” described in the preceding chapter was not confined to the Legislature. Similar scenes were enacted in almost every county and city in the State. As the suffrage limitations placed upon the ex-Confederates applied to all elections, the Radicals were in complete control of these local governments. The large municipalities, such as Memphis, Nashville, Chattanooga, and Knoxville were the greatest sufferers from the rule of irresponsible and corrupt officials.
In 1867, a carpetbagger, by the name of Alden, had succeeded in being elected Mayor of Nashville. Having filled the city council with his political followers, most of whom were non-property-holders, he entered upon a course of open and systematic public plunder, which made even the State administration stand aghast. The city treasury was soon drained. The tax rate was enormously increased; but as this did not suffice, checks, warrants, and due bills, made out in the name of the city, and payable to bearer, were sold to street shavers of notes at any price they could bring. Bonds were also issued. As these evidences of indebtedness multiplied, the market quotations for them declined.