COMPTROLLER OF THE TREASURY. IX

All of these investments pay promptly an annual
interest or dividend, and outside of the Sinking Funds
they all pay 6 or 7 per cent., and $550,000.00 of the stocks
yield annually dividends amounting to 10 per cent.

There is not anything in this whole list comprising
the offset to the State's indebtedness, save perhaps the
over-due obligations of the State, which would not bring
to-day a handsome premium—a million and a quarter
of dollars icould not be too large an estimate—but de-
ducting them at their face value and we have as the net
debt of the State at this time the sum of $6,014,159.68.

It was proposed at the last Session of the Legislature
to sell some of these stocks and bonds, and with the
proceeds thereof, pay the overdue obligations of the
State instead of funding at a lower rate of interest.

In my report to the Legislature I recommended that
the State should hold these high interest bearing se-
curities and refund the past due debt by issuing new
bonds bearing not more than 3 1/2 per cent, interest.

In this view I was sustained by some of the best
financiers Of the State, and my recommendation was
finally adopted by the Legislature by the passage of
the Act of 1886, Chapter 449.

Under this Act of Assembly the Treasury officers
have exceeded their expectations by exchanging the
matured bonds of the State to the amount of $628,-
000.00, bearing interest at the rate of 6 per centum
per annum, for a fourteen-year bond redeemable at tile
pleasure of the State after ten years, bearing interest at
the rate of 3 per centum per annum.

By pursuing this method instead of selling the se-
curities which the State holds, the State receives
6 and 7 per cent, interest per annum on these se-
curities, and at the same time pays but 3 per cent,
on what the it owes on account of the new issue,
and thus the Treasury and the taxpayer alike reap the
benefit of the high credit and financial standing of our
State in commercial circles, which such transactions
necessarily imply.