JOURNAL. ATLANTA,GEORGIA, } January 12, 1876. . In accordance with the Constitution and laws of this State, the House of Representatives, this day convened in .annual session, was called to order by the Speaker, the Hon. Thomas Hardeman, and opened with prayer by Rev. John Jones, the Chaplain. The roll was called and a quorum found to be present. The following newly elected members appeared, were qualified and took their seats, to-wit: From the county of Cobb, Hon. David Irwin. From the county of Wilkes, Hon. Christopher Binns. From the county of Haralson, Hon. J. K. Humber. Mr. Shewmake offered the followed resolution which was agreed to, to-wit : Resolved, That the Clerk of the House of Representa- tives inform the Senate that a quorum of the House is pre!l- ent and ready to proceed to business. Mr. Shewmake also offered the following resolution, which was agreed to, to-wit: Resolved, That a committee of three be appointed by the Speaker to join such committee as may be appointed by the Senate, to wait upon the Governor, and inform him that a quorum of both branches of the General Assembly is present, and will receive any communication he may desire to make to them. The commi~tee appointed by the Speaker under the foregoing resolution, are Messrs. Shewmake, Pitman and H utchenson. _, -: .. 4 JouRXAL OF THE HousE The following message was received from the Senate through Mr. Murphey, the Secretary thereof: Mr. Speaker: I am directed to inform the House of Representatives that the Senate has convened with quorum and is ready to proceed to business. Mr. Turnbull offered the following resolution, which was agreed to, to-wit : Resolved, That the Speaker of the House be authorized to appoint an additional Page for the House, if in his discretion, it may be deemed necessary. The following message was received from the Senate, through Mr. Murphey, the Secretary thereof: .liir. Speaket : The Senate has concurred in a resolution of the House of Representatives appointing a joint committee to wait on his Excellency the Governor, and notify him that there is a quorum of both branche!5 of the General Assembly present and ready for business ; and upon the part of the Senate, have appointed Messrs. Kibbee and Gilmore. The following message was received from his Excellency the Governor, through Mr. Warren, his Secretary, to-wit: .Mr. Speaker: I am directed by his Excellency the Governor, to de- liver to the House of Representatives a communication in writing, with accompanying documents: The message of his Excellency the Governor, was taken up and read; and is as follows, to-wit: EXECUTIVE DEPARTMENT, STATE OF GEORGIA, } Atlanta, Ga., jamuiry 12, I 876. To tlu Getural Assemhly : In the discharge of my duty, under the Constitution, I proceed to inform the General Assembly of the state of JANUARY 12, 1876. 5 the Commonwealth, and t~ recommend to their consideration the measures that are deemed necessary and expedient. In consequence of the vacancy in the office of State Treasurer, which occurred on the 26th day of November last, no formal report of the operations of the treasury during that period, of the last fiscal year ending on the day just named, has been received for transmission to the General Assembly. It devolves upon me, therefore, to present in this communication a full and particular statement of the affairs of the treasury during the period mentioned. STATE TREASURY. By a joint resolution of the General Assembly, passed at the last session, the Governor was directed to appoint a ''skillful and competent person to assist the Treasurer in systematizing the manner of book-keeping in his office; to make out a full and complete registration of all bonded obligations in the treasury ; to ascertain, if possible, all the outstanding obligations recognized as legal or illegal by the State; to report to the General Assembly a tabulated statement of the same," and to do whatever else was necessary ''to protect the interest of the State in the conduct of the business of the office." Under the authority of th.is resolution I appointed James F. Bozeman, who entered upon the discharge of his duties on the 22d day of March last. Mr. Bozeman has prepared and submitted a full report of the results of his investigations, which is herewith respectfully transmitted for the information of the General Assembly. By reference to the tabulated statement accompanying the report it will be seen that the valid bonded debt of the State amounts to $8,005, soo. The whole amount of out- standing bonds of the State declared null and void by legislative enactments is $2,872,000. The amount of bonds classed by Mr. Bozeman as "invalid" is $473,2 50. The outstanding past due bonds of the State amount to $35,500. Of these, it has been ascertained that $12,500 6 } OUR::\'AL OF THE HOUSE are in the possession of Messrs. E. P. Scott & Co., of New York; $8,ooo in the hands of E. L. Hayes, of the State of Rhode Island, and $IJ,OOO are either in the possession of parties unknown, or have been lost or destroyed. A full descriptive list of these bonds has been made and recorded in a book prepared for the purpose. The report shows that the amount of past due bonds legally outstanding is very small. Books of record have been opened, in which all the recognized and valid current bonds of the State, as well as all the overdue and paid bonds found in any quarter whatever, have been carefully registered. A book has also been prepared for the registration of such bonds as shall be hereafter issued. Under an Act approved December I I, 1858, entitled "An Act to provide for the education of the children of this State, and to provide a sinking fund for the extinguishment of the public debt," $350,000 of bonds were prepared and placed in the custody of the Secretary of State. I would respectfully suggest that the public interest does not require that these bonds should be longer kept, and it is therefore recommended that they be destroyed. I also recommend that the $268,000 of 7 per cent. currency bonds, numbering from 1 to 268, inclusive, now deposited in the treasury as security for the school fund, be destroyed. These bonds were deposited as a pledge for the replacement of $242,027.62 of the school fund taken on the 6th day of August, 1870, by authority of the Legislature, and applied to the payment of legislative expenses. It is not probable that the school fund will be materially increased by this deposit of bonds. They should, therefore, be destroyed. The second section of a.n Act entitled ''An Act to set apart and secure the school fund," approved July 28, 1870, is as follows : ''That, from time to time, without delay, as definite JANUARY 12, 1876. 7 amounts are ascertained by the Comptroller General to be due said fund, he shall report the same to his Excellency the Governor, who shall thereupon deposit with the Treasurer 7 per cent. bonds of the State to such an amount as will perfectly secure the school fund." Under this section one hundred and fifty 7 per cent. currency bonds of $1,000 each, dated May 1, 1872, and due July 1, 18gz, were prepared for execution in the Summer of 1872. They were never executed, however, because it was feared that a compliance with this law would injure the public credit. Never having been executed and issued, or even deposited, as directed by the Act, they do not form any portion of the public debt of the State. It is also shown by the report that an amount of 6 per cent. bonds, not exceeding $375,000, was executed, probably in the year 1854, for the purpose of being exchanged for the outstanding bonds of the Central Bank. For some reason these bonds were never issued, but remained in the treasury vault at Milledgeville until November, 1864, when, it is supposed, they fell into the hands of the Federal troops. A rumor exists that attempts have since been made to put them in circulation in a Western State. For the protection of the public against fraud and imposition, I recommend that appropriate action be taken, declaring these bonds null and void. The attention of the General Assembly is especially invited to that portion of Mr. Bozeman's report which refers to the State bonds redeemed by Henry Clews & Co., as former financial agent of the State. It is shown that in the years 1870 and 1871 this agent redeemed bonds of the State amounting to $272,250, of which $g8,250 were afterwards canceled. The remaining $ 174, 000, together with $800,000 of void currency bonds, and 15,000 of sterling bonds, which had also been redeemed, were, on the 13th day of December, 1873, sold by the said agent at public auction, in New York, on one day's notice. At the 8 JouR~AL OF THE HousE sale the $174,000 of bonds mentioned were nominally bid off as follows, viz: $156,000 by J. D. Hayes; $12,500 by the Misses Clews (said to be sisters of Henry Clews), and $5,000 by Messrs. Chittenden & Hubbard. The amount realized from the sale of these bonds was $18,625. The sterling bonds, and the void currency bonds mentioned, were also disposed of for a trifling sum. It cannot be doubted that this pretended sale was a mere device resorted to for the purpose of obtaining a color of right for placing these already redeemed securities a second time upon the market. After the sale they all went back into the control of Henry Clews & Co., and it is alleged that, early in the Spring o( 1874, a portion of the same bonds, amounting to $149,250, was presented at the treasury of Georgia and again redeemed by the late Treasurer. It has not yet been ascertained when or by whom these bonds were thus presented for payment. The late Treasurer himself declares his inability to give any information whatever upon these points. He represents that no written entry or memorandum, throwing any light upon the subject, was made by him. He further professes to be entirely unable to recall any fact which would serve as a clue to the person or persons who presented these bonds for payment. His possession of them seems to be the only evidence within his knowledge showing that he redeemed them. In addition to the principal of the bonds, the late Treasurer claims that he also paid interest thereon, accruing after maturity, amounting to $24,782.15. This alleged payment of interest is not verified by proper vouchers, nor is the Treasurer able to state, from memory or otherwise, to whom the same was made. In addition to the foregoing, it would seem, the late Treasurer also redeemed a second time other bonds of the State, amounting to a large sum. On the 8th day of January, 1873, Alton Angier, clerk in the treasury, received from the Fourth National Bank of New York $21,500 of JANUARY 12, 1876, 9 uncanceled bonds, which matured in June and July, 1872, and in January, 1873. These bonds had been redeemed by the bank, as agent for the State, by exchanging therefor new 7 per cent. bonds, issued under the authority of the Act approved January 18, 1872. Mr: Angier states that he brought the bonds from New York and placed them in the vault of the treasury. It should be here remarked, however, that no entry of the redemption of these bonds was made on the records of the treasury either by the Treasurer or his clerk. The then Treasurer went out of office shortly after the bonds had been received in New York by his clerk, but failed, it seems, to take any receipt showing the delivery of them to his successor. The latter denies that the bonds were turned over to him by his predecessor, and claims that he redeemed them in good faith after he came into office. It is proper to state that he does not remember from whom they were redeemed, nor does he recall any circumstance from which the fact of their redemption by himself can be ascertained. He also claims that he paid interest on these bonds amounting to $1,080. The ascertained amount of the alleged payments made by the late Treasurer, in second redemption of bonds, was $1g6,612. 15, a particular statement of which is presented in the accompanying documents. Before passing from this subject, it is proper to state that in the latter part of the year 1874 the Treasurer obtained warrants in his favor for the amount of the alleged payments mentioned. The payments themselves had been made before the warrants were applied for, and without the knowledge of the Executive. It is not intended by this statement to imply that the special consent of the Executive is required to authorize the Treasurer to redeem the principal and interest of the public debt. Each outstanding bond, and coupon also, when properly signed, is itself a lawful warrant upon the treasury, which it is the duty of the Treasurer to pay upon presentation at maturity. 10 JoURNAL OF THE HOUSE Paragraph XI, section g2, of the last Revised Code of the State, is in the following words : , "When he (the Treasurer) pays the interest or principal of the State debt, upon a warrant issued in his favor, he shall deposit in the Executive office coupons or bonds, on which the payments are made, there to be marked 'paid' and filed away, subject to the order of the General Assembly." Section 955 of the Code is in the following language: ''When bonds or coupons are paid, they must be stamped as paid, and preserved in the Treasurer's office with the same care as the funds of the State." The first section is a codification of the Act of 1845. The second was introduced by the Code of 1863, and materially changed the old law. The first does not require the redeemed bond or coupon to be canceled until after the same is presented by the Treasurer for an Executive warrant. The second requires the cancellation to be made at the time the bond or coupon is paid: The first implies that the cancellation should be made under the direction of the Governor; the second that it must be made by the Treasurer at the time of payment. The first provides that, after the Executive warrant has issued, and the redeemed bonds or coupons have been marked "paid" or canceled, they shall be "filed away" in the Executive office. The second prescribes that, after payment and cancellation, they shall be "preserved in the Treasurer's office, with the same care as the funds of the State." Under the law, as it now stands, the Treasurer is clearly the custodian of the redeemed bonds and coupons of the State. It has been the usage, when the Treasurer applies for a warrant to cover the payment of bonds or coupons, for the Governor to cause such bonds or coupons to be carefully counted by one of the Secretaries of the Executive Department. \Vhen the count, which frequently con- JANUARY 12, 1876. 11 sumes many days, is completed, the vouchers are sealed up in a package, and a memorandum of the contents and amount is endorsed thereon. A warrant, based upon this memorandum, is then issued in favor of the Treasurer, and the package itself remains in the Treasurer's office, "subject to the order of the General Assembly." The warrant thus issued, it will be borne in mind, is not intended to give authority to draw money out of the treasury. Its only effect is to certify that the Treasurer is entitled to credit on the books of the Comptroller General for the amount stated in the warrant. The allowance of such credit, however, is not intended to conclude the right of the State to reopen the transaction for the correction of any error that may have been committed. It is proper here to observe that the usage just mentioned was conformed to, in every respect, when the warrants covering the improper payments referred to were issued. No suspicion had then arisen that the Treasurer was not entitled to the whole amount of the credits claimed by him. I recommend a careful revision of all the laws governing the State Treasury, and that such amendments thereof be made as will guard more effectively the public interest. The law itself should require that itemized monthly reports of the condition and transactions of the treasury be submitted to the Governor, and the information contained in these reports should be, in his discretion, from time to time, given to the public. The law should create a lien in favor of the State upon all the property of the Treasurer and of his sureties, from the date of the execution of his bond. Provision should also be made for the issue of execution against a defaulting Treasurer and his sureties, without the intervention of suit, as is now allowed in cases of Tax Collectors and Receivers. The report of the Treasurer, submitted at the last session of the General Assembly, showed a balance in the treasury, on the 1st day of January, 1875, of $1,003, 128.88. 12 -}ot.:RNAL OF THE HoGSE The amount received into the treasury from all sources from that time to the 25th day of November, 1875-the date ofthe Treasurer's removal-was$1,287,277-37 This sum, added to the balance on hand on the 1st day of Jan- uary, 1875, amounted to $2,290,406.25. With this gross amount the Treasurer stood charged at the time of his removal from office. The aggregate amount of his dis- bursements in the year 1875, as the same appears in the Comptroller General's books, was $810,401.79 This sum, deducted from the gross amount with which he stood charged, left a cash balance against him at the time of his removal of $1,480,00446. The amount of disbursements just stated includes only the payments made under Execu- tive warrants. In addition to these, the late Treasurer claims that he is entitled to a large amount of credits for which no warrants were issued. To the following state- ment of the items of credit thus claimed, the attention of the General Assembly is respectfully invited. On the 24th day of June, 1875, the Treasurer presented his account for interest paid upon the public debt in the year 1874. This account consists of the following items: S per cent. courons for interest clue October 1, 1873............ $46,360 00 8" " April 1, 1874. ...... ...... ... 47,210 00 8 October 1, 1874...... ...... 44,690 00 7 on or before Jan. 1. 1875 259,700 00 7" on bonds issued under Act .January 18, 1872.................. ........................ 39,007 50 6 per cent. coupons for interest clue on and before February 1, 1875............................................................... 62,145 00 7 per cent. on gold coupons, due on or before October1, 1874 99,207 50 :Miscellaneous coupons for interest on past clue bonds, etc.... 34,207 50 Aggregating...................................................... $632,527 50 Of the coupons last mentioned, $6,645 matured at dates prior to January, 1873, and, in some instances, as far back as the year 186r. The records in the Treasurer's office show that the bonds to which some of these coupo~s pertained were paid at dates varying from seven to sixteen years ago. After the year 1868, the State paid the interest JANL'ARY I 2, I 876. 13 on her old bonds, from which fact the presumption arises that these coupons were paid prior to January, 1873, the date of the late Treasurer's accession to office. In many instances the dates of maturity are carefully and ingeniously clipped, or punched, from these coupons in a manner strongly suggestive of a doubtful claim. A portion of them had been twice canceled, and the records in the Treasurer's office indicated that many of them had been paid by a former Treasurer. In many instances, original entries of payment on the records, in the handwriting of a former Treasurer, are altered and overridden by second entries in the handwriting of the late Treasurer. A further suspicion of the validity of these coupons was raised by the admission of the Treasurer, frequently repeated, that portions of them were not proper credits, and had probably been gathere i by his clerk from the sweepings of the vault, and carelessly placed among his vouchers. Objection was made also to allowing the $93,570 of 8 per cent. coupons presented, as already stated, with the Treasurer's account. These coupons represented all of the first year's interest upon the whole issue of 8 per cent. bonds, except $41,000. It was a fact within my own knowledge that a large amount of these bonds was not disposed of until after the first coupon for the semi-annual interest thereon had matured. It was hence reasonably inferred that when they were sold, the matured coupons pertaining thereto were cut off and retained by the Treasurer. No amount of coupons so cut off and retained was reported, however. It was not doubted that the Treasurer was entitled to credit for a large amount of this interest, but no data were furnished from which this amount could be ascertained. His books ought to have furnished the desired information, but no full account of the sales of bonds was submitted. Neither his written nor verbal explanations furnished any satisfactory evidence of the specific amount of credit to which he was entitled. In 14 } OURNAL OF THE HOUSE the absence of this information, it was manifestly improper to assume a fixed amount ; and hence, this whole item was held up for further investigation. I respectfully submit herewith, for the information of the General Assembly, a particular statement of the coupons so disallowed, and of the Treasurer's written answers in explanation of the objections thereto. REMOVAL OF THE TREASURER-HIS ASCERTAINED LIABILITIES. From facts which came to my knowledge during the treasury investigation, I formed the opinion that the surety on the official bond of the Treasurer was insufficient. Thereupon, an Executive order was issued and served upon him personally, on the I sth day of November last, requiring new bond and surety to be executed in terms of the law. With this requisition the Treasurer failed to comply, by reason whereof his office became vacant by operation of law, on the 26th day of November last. During the period allowed for the execution of new bond and surety, the receipts into the Treasury were deposited in the Citizens' Bank, of Atlanta, and disbursements during the same period were made directly from this bank, upon Executive warrants only. The sums so received and disbursed are particularly stated in the report of the Comptroller General, herewith transmitted. Within the time prescribed by law, the late Treasurer made a statement of his accounts and delivered the books and papers of the treasury, together with an amount of money, to his successor, taking his receipt therefor. This statement of settlement was duly recorded in the Comptroller General's office; but the receipt taken, as just stated, for the property of the treasury, has never been presented for record. By referring to this statement of settlement, a copy of which accompanies this communication, appears that the late Treasurer stood charged at the time of his removal, }A~UARY 12, 1876. 15 with a balance of $1,480,004.46. This statement of balance is verified by the Comptroller General's books. The credits claimed by the late Treasurer in his said statement, amount to $1,544,93095, from which it would appear that the State is indebted to him, on account, in the sum of $64,926.49. A careful audit and statement of accounts, made since his removal from office, shows a net cash balance against the late Treasurer, however, of $1 10,274 84. This balance, it should be here remarked, is exclusive of all illegal and improper payments made by him, and includes only the ascertained amount of cash actually remaining in his hands at the date mentioned. The entire amount for which he is liable on all accounts, as shown by the carefully prepared statements accompanying this communication, is $291,969.95 By a joint resolution passed at the last session of the Gene- ral Assembly, the Governor was directed to have suits instituted against the Treasurer and his securities on their several bonds, for the recovery of the amount appearing to be due from the former to the State. The institution of these suits was attended with unavoidable delay, on account of the great difficulty in ascertaining the true condition of the Treasurer's accounts. So soon as the necessary information upon which to predicate suit was obtained, however, the Attorney General was instructed to lay the cases before the proper courts. These instructions have been complied with. The Governor was also instructed, by a joint resolution, passed at the last session, to cause certain bonds and coupons, in said resolution mentioned, to be burned, and to report the fact of their destruction to the General Assembly at its present session. This direction has not been complied with, for the reason that these bonds and coupons will be required as evidence in the several actions now pending against the Treasurer and his securities. A vacancy existed in the office of State Treasurer from 16 JOURNAL OF THE HOUSE the 25th day of November last, until the 4th day of December following. During this period, the Comptroller General acted, by Executive appointment, as State Treasurer. The amount received by him while so acting was $204,287.79 The amount disbursed during this period was $21,730.16, leaving a balance to be turned over to the new State Treasurer, of S182,557.63. APPOINTMENT OF A NEW TREASURER. On the 4th day of December last, the Hon. John W. Renfroe, of Washington county, was, by Executive authority, appointed and commissioned State Treasurer, to act until the next meeting of the General Assembly. RECEIPTS AND EXPENDITURES. The whole amount received by the present Treasurer, from the date of his appointment until the close of the last fiscal year, was $782.240.07. The disbursements during the same period were $270454.86, leaving a balance in the Treasury, at the beginning of the present year, of $511,785.21. For a more particular statement in regard to the receipts and expenditures of the last fiscal year, the General Assembly is respectfully referred to the report of the Comptroller General. I commend to the favorable consideration of the General Assembly, the several recommendations of the Comptroller General, suggesting amendments of the law exempting certain kinds of property from taxation. The tables accompanying the report of the Treasurer contain a particular statement of monthly receipts and expenditures in the year 1875 ; and, also, a distinct statement of the amounts received at the treasury since he came into office, and of the sources from which the same were derived. A tabular statement of the public debt, with amounts of interest thereon, payable quarterly and semiannually, is presented. The Treasurer gives a detailed description of all the maturing bonds of the State ; and, also, jANUARY 12, 1876. 17 <>f the bonds of the several railroad companies on which the State is bound by endorsement. RECOMMENDATION REGARDING BONDS. I would respectfully call the attention of the General Assembly to the following extract from my last annual message: "To prevent the injury to the public interest likely to result from any unauthorized or unlawful negotiation of our securities, I would suggest that all the bonds recognized as legal and binding on the State, issued during the late administration, be withdrawn from circulation, and that other bonds, of similar amount and of proper tenor and ~ffect, be issued in lieu thereof." The reasons which induced me to submit this recommen