the State. It disinters from the bowels of the earth, where it sleeps in its crude form, inert and useless, the most valuable mineral known to man, and converts it from a dead and cumbersome earth, into an agent of living and active usefulness; one entering into every use, and constituting the basis of all the pursuits and business of civilized life; an essential, necessary in every art and improvement, and in every trade. With it the earth is tilled for food, clothing is made to cover our nakedness, houses for our shelter, ships for our commerce, arms to defend our property, lives, and liberty and, in short, from its use, come all the innumerable appliances, which at every moment and in every circumstance and condition of life, minister to the necessities, comforts and enjoyments of existence. It may be added, that this enterprise constitutes a most important step towards converting into one of its most productive portions, a large section of your State, which, although abounding in fertile lands and industrious farmers, and admirably adapted for raising the provisions to support a manufacturing population, and having all the natural advantage necessary for such pursuits, has hitherto contributed but little to the productive wealth of the State. It should not, therefore, be a matter of censure or surprise, that my able, patriotic, and venerable predecessor, under whose andministration this transaction took place, should, in his known devotion to all that he thought calculated to advance the welfare of the State, have given his sanction to a measure calculated to develope its richest resources, and to stimulate its improvement in all peaceful pursuits, while it prepared a resource for arming and defending her in a time of war; and that too, with perfect safety to her treasury, and without costing the public a cent. All of which is respectfully submitted, T F. H. ELMORE, President. (1842.) Letter of the President of the Bank, in answer to a call from the Committee of Ways and Means respecting the Fire Loan Borrowers. To C. G. MEMMINGER, ESQ., Chairman Committee of Ways and Means : 1 have before me the call of the Committee of Ways and Means, for my opinion, "Whether the granting relief to the Borrowers of the Fire Loan in Charleston, will affect injuriously the credit of the State abroad, or the ability of the Bank, as the agent of the State, to meet and discharge, as they fall due, the payment of the interest and principal of the public debt, and my reasons therefor." The credit of the State abroad, depends upon an ability to meet her debt; the punctuality with which she discharges the payment of the interest; and the evidence she exhibits to the holders of her bonds, that she will have the means in readiness, when the principal falls due, for its faithful payment. The ability of the State to pay her public debt depends, first, upon her general resources, viz: The property of her citizens, upon which taxes may be laid; and second, upon specific funds or property of her own, to which she may resort for means of payment. Of the latter class, the Bank of the State constitutes the chief, and for all available purposes, almost the only resource. The State has solemnly pledged to the public creditors, all the former, in pledging the faith and credit of the State, and has specifically and distinetly pledged and appropriated the Bank, and its profits also, to the same. purpose, making it, especially in the case of the foreign ereditors, the agent of the State to pay the interest and principal, and directly responsible to them for both. First: The credit of the State abroad, so far as it depends upon the value of the property of her citizens generally, and their ability to meet by taxation, whatever may be required for the fulfilment of her contracts with the public creditors, and for the preservation of her faith and honor untarnished, would not, it appears to me, be injuriously affected, either at home or abroad, by the proposed measure of relief; but, on the contrary, by preventing heavy and ruinous sacrifices of the property of this class of its citizens, and giving them time and opportunities for working through their difficulties in more propitious times, very great depreciation in the values of other property of all classes of our people will be arrested, and a serious derangement of business avoided, by which the general ability of all to sustain themselves, and meet their liabilities, will be promoted, and the State be strengthened and made more able to fulfil her obligations, if ultimately she should be placed under the necessity of resorting to taxation for the means. Second: The inquiry of the Committee, which covers the ability of the Bank to meet and to pay the interest and principal of the debt of the State, is that which is most material. To a great extent the same general principle will hold in this, as in the first branch of the subject: The ability of the Bank will depend on the ability of those who are its debtors; and they consist, as to this inquiry, of two classes. First: The debtors, other than Fire Loan Borrowers. Although totally distinct in the natue and character of their debts, thereis a connexion or sympathy in their affairs, which exercises, to some extent, an influence over each. It is impossible in any community, to cause a serious depreciation in the prices of any kind of property which is of considerable extent and value, without affecting, not only all other property of the like kind, but of all other kinds; and every depreciation of value in property, to that extent diminishes the means of those who are in debt to pay their debts; distrust succeeds to confidence-settlements are urged-embarrassments multiply, and panic and ruin succeeds. The property mortgaged by the borrowers of the Fire Loan is about 130 houses and lots extending to 160 tenements, and worth, at ordinary valuation, scarcely less than $1,500,000, and probably as much as $2,000,000. If this relief is not extended, much of this property must of necessity become an utter sacrifice to the present owners, for it has now no market value. It may not be out of place to recall to your memory some circumstances, besides the general causes which depress it everywhere, which conspire just now to exercise an unfavorable effect on the value of property in Charleston. The fire itself, in April, 1838, destroyed probably two millions of property which was an entire loss, the failure of the United States Bank has sunk two millions and a half more of the capital and resources of her citizens, and their expenditure for constructing our Rail Road has absorbed no inconsiderable additional sum. The buildings erected by the petitioners have, with the lots on which they stand, cost, generally, considerably more than the money borrowed. These circumstances are sufficient in themselves to exercise a very unfavorable influence on their value, but combined with the universal derangements of business, the fall in the price of our staples, and depreciation of property everywhere, the effect is almost fatal to any present market price whatever. We have tested the truth of the above opinion, by exposing at different times during the past year, houses and lots made liable by failure to meet the requirements of the Fire Loan, and I regret to say, that no purchasers appeared, and the results have been such as to satisfy me that fundamental changes are necessary in the law. I cannot, therefore, but answer, that the relief proposed would exercise a beneficial influence on the ability of the whole community, and in that view rather strengthen than weaken the ability of the Bank, as it will of all other Banks connected with the business of the city. In regard to the Fire Loan borrowers themselves, there are some views on which my opinions are founded, which I proceed to give. If they are able, or made able to meet their Bonds as they fall due, or in a reasonable time before the debt contracted for this loan by the State falls due, there can be no serious apprehension for the credit of the State. The question then arises, are they able? And if not able, is there any plan by which a reasonable prospect is held out, to make them able? From what I have stated above, it will appear, that I do not think, as a class, they are able to meet and discharge, as they fall due, their interest and instalments under the law as it now stands, and I feel it due to them to say that this disability has grown mainly out of revulsions and reverses for which they are not to blame-causes affecting all business, property, and pursuits in all quarters of the globe. I have stated before, that the lots on which the buildings are erected, were in many instances purchased for the purpose; they were paid for, to get a clear title to mortgage, at high prices, and the buildings, especially those put up at an early day, were built at great expense of materials and labor; and the parties have expended, out of their own means, very considerable sums in addition to the money borrowed. The present unexampled depression, therefore, finds them exhausted by the great expenses incurred in their improvements; and the same causes have so diminished the values and profits of mercantile pursuits in Charleston, that tenants and business are no longer to be had at remunerating prices. The fall of rents has been very great; 50 per cent. perhaps would not measure the extent of the fall; and under these circumstances, to carry out the law as it stands, the Bank, upon their failure to pay either interest or principal, must sell the houses and lots on which failures are made, for cash. For these, with now and then an exception, no real purchaser appears, and the consequence is, that the property is bid off by the owner, who don't pay, or by the City of Charleston as the guarantor. It is therefore manifest that the credit and ability of the Bank is no way increased by this operation, but rather we may say, lessened and impaired. It is proper, perhaps, I should advert to the effect likely to be produced on the City of Charleston, if the relief is not granted. Unless some ex traordinary and immediate change comes over her affairs, the trade and commerce of the city, now greatly embarrassed, will not be increased in extent or value. Some of these buildings are now without tenants, and unoccupied. She will have no increase of men of business-no addition to her capital, and therefore no use for the buildings which will be thrown upon the market. These must be bought in by her, and she be compelled to pay the Bank for the Bonds she guaranteed. How is she to pay this? She cannot sell the houses; and while she owns them, she receives for them but little rent, and no taxes. She must raise the amount she will have to pay, by taxing the property and business of her people. The taxes already imposed on business and property for the use of the city government, are so heavy, as to be a serious burthen on commerce and residence in her limits; and it is a fact well known, that many of her citizens, including some of her most opulent men of business, as well as others, who could contribute much to support her, have removed out of the corporate limits of the City, on the Neck, where a new city is growing up. Every person who leaves, weakens her resources, and compels her to increase the taxes on those who remain. The increase in her taxes, which will be necessary to enable her to pay her liabilities for this debt, if in the whole or any considerable portion, it is thrown upon her, will cause a still farther depopulation, less need for these buildings, a constantly descending value of all property in her corporate limits, and a consequent decline in her commerce, capital, population and importance. The important question then recurs. Is there any reasonable prospect held out to make the property built with the Fire Loan, itself available, and the borrowers able to meet their bonds? In stating my opinion, that there are hopes of this result, if the relief asked for is granted. I must task the patience of the committee for a few moments longer, while I give my reasons for thinking, as I do, that this can and will probably be effected. The great effort recently made by the States of South-Carolina, Tennessee and North-Carolina, to construct a Rail Road to the Ohio, from which such mighty results to the trade and business of Charleston were anticipated, has proved a failure. No one doubted, had it succeeded, but it would have given immense increase to trade, and that it would have brought great accessions of capital, and men of business, to fill up these buildings with useful tenants, and a prosperous commerce. But we have failed in finishing this work, and been saved thereby the expenditure of the many millions of money which it would have cost, while by a providence that has ever been watchful over us, the enterprise has been almost effectedfor us, and will undoubtedly be finished before long, by the State and people of Georgia, at a cost of more than $5,000,000. A great line of Rail Road, beginning at Augusta, where ours ends, and extending to the navigable waters of the Tennessee River-penetrating 450 miles from Charleston into a most fertile portion of the South-West, and opening at that and intermediate points, channels of commercial connection with Georgia, Alabama, Tennessee, North-Carolina, Virginia, and indeed the vally of the Mississippi, is in rapid progress of construction; and when completed to the Hightower River, (the point to which its completion is now a matter almost of certainty,) the City of Charleston will then be in direct communication, by a continuous Rail Road of three hundred and ninty miles, with these extensive regions. This extention of commercial intercourse into the heart of so productive a country, with the measures now in progress to cheapen the expense of transportation, and to increase the facilities of business by this road, it is a fair presumption, must produce no inconsiderable addition to the trade of the city, and to the population which carries it on. From this cause, and from the changes which it is by no means improbable may succeed this stagnation, it would appear but reasonable that a reaction will follow, and impart additional value to this property, and consequently increase the ability of its owners to pay what they owe for it beyond what is exhibited in the present condition of things. A healthful and vigorous revival of enterprise and commercial activity, at no very remote period, is entirely within the range of probability, from which we may expect a safer and more sound condition of things than that from which we have fallen. If this change for the better does not come, the worst that will follow the relief asked for, will not make matters worse than they now are, and must be, if it is refused; while the future, which seems to hold out a fair and reasonable prospect of improvement, may fully realize all it seems to promise; and if by this course the borrowers of the Fire Loans are enabled to pay them up, or have such a value imparted to their property, that others will purchase it and pay the debt, it will be a most important point gained, in saving the City of Charleston, our great emporium of commerce, from a liability which will hang heavily on her, and greatly impair the growth of her trade, population, and resources-matters which the whole State has a deep stake in fostering in the highest degree. These One other point remains: In the relief asked for, the petitioners pray that sales, when made, may not be for cash, but for such credit as remains unexpired on the original loan-upon condition that the purchaser shall give the same kind of bond, with good personal security, and a mortgage with same conditions as in the original loan. That such an arrangement would be equitable, and that by adding to the security of the debt, it will add to the resources and ability of the Bank, is very apparent. loans were begun in 1838, and were finished, the last about the 1st of October, 1841. All the instalments, therefore, are payable before the debt of the State, contracted by borrowing for the Fire Loans, falls due. The securities for the debt are: 1. The bond and mortgage of the borrower; 2. The guarantee of the city; 3. The insurance of the buildings at the amount of the loan. To these it is proposed to add, in case of sales, a fourth in personal security on the bond of the purchaser, preserving all the others. With these precautions, I think the credit of the State cannot be affected injuriously, nor the ability of the Bank impaired to meet and discharge, as they fall due, the interest and principal of the public debt, by the measures of relief suggested by your Committee. Very respectfully, your obt. servt. F. H. ELMORE. President. |