CJ 
 
Library 
 
 OF THE 
 
 University of North. Carolina 
 
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 01». X d«A,*vel( 
 
 'Q>32iM_ ft»t>vh 
 
REPORT 
 
 FROM 
 
 THE PUBLIC TREASURER. 
 
 IN ANSWBR TO 
 
 A RESOLUTION OP THE LEGISLATURE, 
 
 ftALEIGH: 
 W. E, GALES, PRINTER TO THE LEGISLATURE, 
 
 1846, 
 
Treasury Office of North Carolina, j 
 Raleigh, 14th Dec. 1846. { 
 
 lb the honorable, the General 
 
 Assembly of North Carolina : 
 
 | The House of Commons having passed the following 
 Resolution, " Whereas, the State of North Carolina has 
 become liable, by endorsements, for the Raleigh and Gas- 
 ton Rail Road Company for the amount stated in the Re- 
 port of the Public Treasurer, and the present Legislature 
 being determined, so far as depends on their action, to 
 preserve the faith and credit of the State, and to enable 
 her to meet promptly all her liabilities. Therefore, Re- 
 solved, that the Public Treasurer be called on to submit 
 to this Legislature his views in regard to a scheme of 
 Finance, whereby a Fund can be created to meet the 
 wants of the Treasury arising from the endorsements 
 aforesaid;" the Public Treasurer in obedience thereto, has 
 the honor to submit the following Report. 
 
 
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REPORT. 
 
 STATE LIABILITIES. 
 
 The State became responsible for $500,000 as a surety 
 of the Raleigh and Gaston Rail Road Company, bearing 
 interest at the rate of 6 per cent, per year, payable half 
 yearly. 
 
 The principal of the Debt is redeemable at the pleas- 
 ure of the State after 1st January, 1860. (Act of 1838.) 
 Of this Scrip, individuals hold at this time, $360,000 
 
 The Literary Board holds at this time. 140,000 
 
 Whole Loan, $500,000 
 
 The Interest has been paid to July, 1846. 
 
 The State afterwards became responsible in like man- 
 ner for the same company, for the sum of $300,000, bear- 
 ing the same rate of interest. The principal of the debt 
 
is redeemable by annual instalments of 530,000, begin- 
 ginning in January 1815. (Acts of 1840.) 
 
 0f this Scrip, the Literary Board holds 823,300 
 
 Individuals now hold 203,200 
 
 $226,500 
 
 The instalments duo in January 
 1845 and January 184b', having 
 been paid off, 50,000 
 
 There remains on hand, not used 
 by the Company, of the .$300,000 
 loan, 13,500 
 
 $73,500 
 
 So any " scheme of Finahec," which will " preserve 
 the faith and credit of the State, and enable her to meet 
 promptly all her liabilities," must provide revenues to 
 pay the following sums and the interest on them, to-wit: 
 
 To individuals, a principal debt of $503,200 
 
 To Literary Fund, do. of 163,300 
 
 Tke debt to individuals falling due at different periods 
 and by unequal instalments, and that to the Literary 
 Eoard all at one time, January 1860, except 823,300. 
 
 WAYS AND MEANS. 
 
 After the annual Report from this Department, it is 
 hardly necessary to remark, that the Revenues of the 
 State Treasury are not sufficient to meet these demands 
 wpon it- But the difficulty may be obviated in several 
 ways, without hazarding the public faith. 
 
 First. 
 
 Let the President and Directors of the Literary Fund 
 call in their outstanding loans, (as recommended in ths 
 
Governor's Message.) arid invest the amount in the scrip 
 now held by individuals, (of the $500,000 loan,} so as to 
 purchase at least $63,200, as on the 1st January 1847, 
 and hold the same as a part of tile invested Funds of 
 that Board. 
 
 Let the Public Treasurer sell and dispose of Two thou- 
 sand Shares of the Stocks owned in the Bank of the State. 
 and in the Bank of Cape Fear, viz ; 1,000 Shares in each 
 Bank and apply the proceeds in satisfaction of so much 
 of the $300,000 loan as remains unpaid ; crediting the 
 Literary Board with .$200,000 principal, on account of 
 said Stock at the State Treasury. 
 
 Let the Raleigh and Gaston Kail Road be conveyed to 
 the President and Directors of the Literary Fund forth- 
 with, with power to control and manage the same, and 
 to take the profits until it can be otherwise disposed of; 
 and let said Board be directed to- sell the said Road upon 
 such terms as they shall deem best for the interest of the 
 Fund, with a guaranty that their bargain shall be ap- 
 proved, whether the purchaser be an individual or an in- 
 corporated company, &c. And upon the conveyance of 
 said Road to the said President and Directors, let them 
 be charged by the State Treasury with $303,000 the 
 price bid for said Road. 
 
 The State by the same Act might pledge herself to 
 make good to the said Fund, in the end that any loss may 
 occur in the re-sale of said Rail Road, and to preserve and 
 keep up the income of said Fund to 6 per cent, per an- 
 num by future appropriations thereto, should they become 
 necessary. 
 
 These changes being made in the public property, (and 
 with the means on hand they may be accomplished by 
 the operation of simple resolutions requiring the State 
 officers and Agents to make them.) the debt owing to in- 
 dividuals will be reduced from 8563,200 due By instal- 
 ments to $300,000 payable after 1st January. I860. And 
 the yearly interest payable to individuals will be reduced 
 from $33,822 to $18,000. 
 
8 
 A DDITION AL REVENUES. 
 
 To provide for the interest on the Public Debt, and to 
 commence a system for accumulating a fund to sink the 
 principal for both, or either, it will be necessary to en- 
 large the Revenues of the State Treasury. This may 
 be done also., without any fundamental changes of the 
 existing system of taxation in North Carolina, and with- 
 out oppressing the people by unreasonable exactions. 
 The Public Treasurer, in obedience to the mandate of 
 the House of Commons, respectfully suggests, therefore. 
 that the following taxes might be levied and paid into 
 the State Treasury, as the necessary part of any " scheme 
 of Finance" to fee devised for meeting the demands 
 upon it : 
 
 1st. Let the Vacant lands in the State, here- 
 toforc excluded from entry, be made lia-* 
 ble to sale by entry, at sueh prices as 
 may be reasonable, and that will proba- 
 bly increase the receipts for entries per 
 year, at least 85,000 
 
 2d. Let the Tavern Tax, and Tax on Retail- 
 ers, and Tax on Auctions, with all monies 
 hereafter paid into the Treasury by vir- 
 tue of the present Revenue laws for 
 Land Entries, be attd remain therein as ; 
 a part of the State Treasury, until the 
 year I8G0, any law to the contrary not- 
 withstanding. They amount, per year r 
 to about 22.0CC 
 
 3<J. Let the Tax now collected upon Tavern 
 Licences, and Licences to retail Spirit- 
 uous Liquors, be increased from $4 to $5. 
 viz. by adding one dollar to the present 
 tax, estimated yearly at 750i 
 
 4th. Let the Taxes now collectable upon the 
 licences of Attorneys at Law, be required 
 
to be paid into the State Treasury, 
 through the agency of the Clerk of the 
 Supreme Court, estimated yearly at . 500 
 
 5th. Let there be a State tax imposed upon 
 the original writ or leading process in 
 each suit in any Court of Record, and 
 upon each indictment found by the Grand 
 Jury, say one dollar, provided that where 
 there are more than two defendants 
 'charged in the same indictment, each 
 one shall pay the full tax, estimated at 1,250 
 
 If not over-estimated, they would increase 
 
 the revenues of the Treasury about 22,500 
 
 Which, being added to the existing surplus of 18,500 
 
 Will make $41,000 
 
 a year. 
 
 These may be increased by Taxes imposed 
 upon various articles of property of luxu- 
 ry, already under consideration by the 
 General Assembly, should it be consider- 
 ed wise and proper to do so. 
 
 This brings us to the important practical inquiry, 
 whether such a surplus will enable the State to redeem 
 her faith, and preserve her credit ? With the arrange- 
 ments proposed, the Public Treasurer reports, that in his 
 opinion there is no reasonable ground to doubt it. 
 
 Thus after paying the interest, $18,000 upon the debt to 
 individuals, there would remain in the Treasury nearly 
 or quite $22,000, which would be more than sufficient to 
 pay the interest accruing upon the debt to the Literary- 
 Fund Indeed, it will pay the interest and leave a con- 
 siderable residue for sinking the principal of the public 
 debt, aided as it will be by the income of the Rail Road 
 before it is sold and the purchase money afterwards, 
 
10 
 
 Second. 
 
 Another scheme fcr meeting the said demands might 
 be considered more wisp, though it is raiher the same 
 scheme with a single modification ; and that is, instead 
 of gelling 2 000 Shares of Bank Stock to pay §200,000 of 
 the debt, let the State sell 3,000 Shares of Bank Stock 
 and pay off S3CO.01O of the debt, so as to leave only 
 §200,00 J of thts del t in the hands of individuals and re- 
 duce the annual interest to be paid to them from SI 8,000 
 to 812.000. Very prudent men who have been consulted, 
 differ in their opinions on this point, and the Public Trea- 
 surer submits it to the General Assembly to decide be- 
 tween the two schemes without comment. 
 
 From these statements it must be obvious to the plain- 
 est mind, that the " scheme of Finance" here proposed, if 
 adopted, will preserve the credit of the State and effec- 
 tually protect the public honor. If the revenue to be 
 derived from the taxes recommended should fall below the 
 estimates one half, still the interest of the public debt 
 will be in hand to pay individual creditors and the honor 
 and credit of North Carolina will be preserved. 
 
 OBJECTIONS. 
 
 The objections which have been'made against it, have 
 been candidly examined so far as the Public Treasurer 
 has had it in his power to consider them. 
 
 First. It is said that this scheme transfers the Rail 
 Road to the Literary Fund at more than it is worth. 
 
 The answer is, that the Board has power to sell the 
 Road, and the State, by this " scheme of Finance," 
 pledges herself beforehand to make good any loss to the 
 School Fund. And admitting the fact of a loss being 
 probable, is it not better to tax the people to pay a loss 
 after it shall have been ascertained, than to burthen 
 them beforehand, when it may turn out in the end that 
 there will be no losses to pay I Cannot the State's own 
 
II 
 
 Board trust the State? Cannot North Carolina trust 
 herself? If not, how is her credit to be preserved in 
 the world ? 
 
 It is believed by many persons, that the Rail Road 
 will sell for $363,000. If so. there can be no loss to the 
 Literary Fund. Should it sell for no more than $203,200, 
 there can be no loss to that Fund, for it will be noted 
 that the foregoing scheme requires no larger sum than 
 that to be advanced by the School Fund. If it should 
 sell for no more than $200,000, the loss would be com- 
 paratively very small and easy to provide for, viz : 
 $63,200, to say nothing of what may be recovered on 
 the Indemnity Bonds for $500,000. The whole differ- 
 ence would hardly constitute, in any event, an available 
 excuse for premature taxes. 
 
 So this objection disappears. 
 
 Second. The next objection is, that the income of 
 the Literary Fund ought not to be invaded. The Gen- 
 eral Assembly must perceive, that the income of the 
 Literary Board from their invested Fund is not to be de- 
 creased, nor its operations impeded, even for a year. 
 
 The State holds more than a million of dollars in 
 Stocks of the Banks whose charters expire in 1860, and 
 the income of that stock has been dedicated to Common 
 Schools," subject at all times to the control of the Gene- 
 ral Assembly ;" but the principal is not to be expended, 
 and it will have to be re-invested at the expiration of 
 the Bank charters. The State at the same time owes a 
 debt, the principal of which falls due in part before 
 1S60 ; and now the question is, whether the people 
 should be taxed to pay up the latter, when a small part 
 of the former may be readily substituted for it in relief 
 of the tax payers, and leave nothing to be levied by 
 taxation besides the interest Even that charge may 
 soon cease altogether, and will certainly be diminished 
 in a few years, viz. after the proceeds of the re-sale of 
 
is 
 
 the Road, and the recoveries effected upon the bonds of 
 Indemnity, can be made available as cash or stock. 
 
 To refuse to use the means on hand, but to tax the 
 people immediately to pay off the principal of the public 
 debt — upon such a theory in legislation as that a public 
 stock is too sacred for public use — would seem to be both 
 unwise and oppressive, as will be more clearly demon- 
 strated when you come to see hereafter, by actual com- 
 putation, what amount of taxation would be requisite. 
 
 The Public Treasurer would by no means inculcate 
 the idea that the income of the Literary Board, from 
 their invested Funds, should be materially lessened in 
 preference to a resort to moderate taxation. And al- 
 though it has been objected to this scheme, that such 
 will be its effect, he is confident that the fact is not so ; 
 and at the peril of being tedious, he desires to vindicate 
 the scheme by a plain demonstration, as follows : 
 
 This scheme impairs in no respect the security of the 
 Board for the Bonds already held by it, viz : §163,300. 
 
 The interest upon the Bank Stock of §200,000 would 
 be §12,000 per year, and to pay this the Company will 
 have all the income of the Rail Road (which no one esti- 
 mates lower,) until the Road shall be sold, and the whole 
 price after it shall be sold. The only additional part of 
 the capital of said fund interfered with, will be the 
 §63.200 to be invested in the purchase of the State scrip, 
 payable in 18G0. The interest on this will be $3,S22, 
 and to pay that amount this scheme presents a surplus 
 in the Treasury abundantly sufiici nt — superadds to it a 
 direct pledge of public faith, and to make assurance 
 doubly sure, it not only confers upon the Board the au- 
 thority to sell the Rail Road and to take the purchase 
 money into their hands, but it reserves the Bonds of in- 
 dividuals and stockholders for 8500,000, to satisfy any 
 deficiency. 
 
 It is a capital reason in favor of this scheme, that 
 
18 
 
 whilst it provides at once and permanently for the pre- 
 servation of the public credit, it transfers the Rail Road 
 to be sold by agents who can take care of the public in- 
 terests and deal upon equal terms' with those who mny 
 be inclined to purchase it, and that by these means the 
 whole amount of the public loss, (if any,) will be as- 
 certained before the meeting of another Assembly, who 
 may then provide the ways and means of repairing it, 
 with no false conjectures to mislead them. 
 
 The Public Treasurer begs leave to remark, that he 
 has endeavored to profit by the recommendations in the 
 Governor's Message, and considering them valuable and 
 approved principles to be engrafted into any scheme for 
 preserving the public credit, he has freely introduced 
 most of his suggestions into this report without any 
 express acknowledgement. Where he has omitted any 
 one of them, it has not been done for the purpose of 
 withdrawing it from the consideration of the General 
 Assembly. But it is nevertheless proper to state, that if 
 the $50,000 debt owing by the Wilmington and Raleigh 
 Rail Road Company were transferred to the Literary 
 Board, there would be a necessity for providing the 
 same amount to pay off a Bond for $50,000 due by the 
 Treasury to the Bank of Cape Fear. For that reason, 
 no notice has been taken of either of said debts in this 
 scheme. 
 
 The idea has been a good deal encouraged, that the 
 debt incurred by the State for the Raleigh and Gaston 
 Rail Road, had better be paid off by a sinking fund to 
 be levied by a public tax at once ; and therefore, the at- 
 tention of the Public Treasurer has been carefully di- 
 rected to that point. 
 
 By the scheme submitted, the Rail Road will be, in 
 substance and effect, used at its full value as a sinking 
 fund, and it will be an easy task to devise a system for 
 sinking the principal of the $200,000 or $300,000 which 
 will still remain due to individuals. Would it not be 
 safer and better, however, to defer that until the Rail 
 
u 
 
 Road shall have been actually s<jld and disposed of, and 
 the suits upon the Indemnity Bonds determined by the 
 Courts? Should it be desirable, the Public Treasurer 
 will be ready to report upon that subject when he is re- 
 quired by the General Assembly, either now or at the 
 next Session. At present, he will barely submit certain 
 results, to which accurate calculations have brought 
 him in his efforts to carry into practice this idea of im- 
 posing an immediate tax to discharge the whole public 
 debt, by the operation of a sinking fund, without using 
 any part of the Bank Stocks or other funds of the State 
 on hand. 
 
 The first difficulty that occurred was this — That 
 $226,500 of the debt falls due by instalments, annually, 
 so to that part of the debt, the principles of a sinking 
 fund are wholly inapplicable. It can be removed in no 
 other way but by paying it with the Bank Stocks as here 
 proposed ; or else by negotiating a new loan upon an ex- 
 tended credit to January 1860 or later. It might not be 
 easy to accomplish this new loan at par, now that the 
 United States are likely to be in market as borrowers for 
 large amounts. But that obstacle out of the way and 
 there must be a revenue levied by taxation, sufficient to 
 pay the yearly interest upon the whole debt of 8727,000, 
 viz : $43,620, and a yearly sinking fund of about 838,500, 
 in order to extinguish this debt in January 1SG0. An in- 
 creased taxation this of more than double the present 
 rates ! An increased annual tax of $82,000 and up- 
 wards ! ! 
 
 In the opinion of this Department, it would be unwise 
 to impose it. 
 
 If this system of finance (by immediate taxation to 
 raise a sinking fund) were resorted to for the residue of 
 the debt after deducting that part which already belongs 
 to the Literary Fund, viz : for $563,200 only, it would 
 take an annual revenue of $33,790 to pay the interest 
 and about $30,000 to contribute to a sinking fund in or- 
 tier to extinguish it on 1st January 1860. A less sum 
 
If 
 
 would not do it. An increased tax this of nearly 
 $64,000 which there is no absolute necessity to impose 
 upon the people. 
 
 The Public Treasurer cannot suppose that such a 
 scheme would be approved by the General Assembly, and 
 lie rather thinks that its advocates have not examined 
 the subject fully, nor tested their theory by a calculation 
 of the taxes it would impose upon their consituents. 
 
 In connexion with this report, it seems not inappro- 
 priate to remark, that the want of statistical knowledge 
 has been sorely felt at this Department ; and is it not 
 remarkable, that no law of the State has ever been pass- 
 ed for compiling and preserving in any public office, that 
 sort of authentic information in respect to the produc- 
 tions, trade, agriculture, mechanic arts, and manufac- 
 tures of North Carolina, which is so useful in examina- 
 tions of the Revenue system, and of the finances and 
 resources of the State ? 
 
 By a diligent use of the very imperfect lights to be 
 obtained on so short a notice, the Public Treasurer has 
 been able to devise no efficient scheme that will be likely 
 to encounter less hostility, or that is liable to fewer ob- 
 jections, than that which he has now submitted. Human 
 wisdom, however, could hardly invent a system on such 
 a subject, that would be effectual and yet be acceptable 
 to every body in all its parts. It seems to be admitted, 
 that the duty of putting in operation some system of fi- 
 nance to preserve the credit of the State, has devolved 
 upon this Assembly, and that it cannot be refused with 
 honor nor deferred with safety ; and therefore it might 
 be considered a sufficient reason in favor of the scheme 
 here offered, that it effectually saves the public credit 
 and disposes of the Rail Road, whilst it does not prevent 
 a future Assembly from repairing any defects in present 
 legislation upon this subject. Should it be the will of 
 the people to be taxed heavier, in order to pay back the 
 Bank Stock to the Literary Fund in preference to pay- 
 ing the interest only, their representatives will be able 
 
16 
 
 to obey their wishes, and there is nothing in this scheme 
 to hinder or embarrass them in doing so, at a future 
 session. 
 
 I have the honor to be 
 
 Your most obedient servant, 
 
 CHARLES L. HINTON, 
 Pub. Treas. 
 
UNIVERSITY OF N.C. AT CHAPEL HILL 
 
 00042071989 
 
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