dollar bond issue, the writer has departed slightly from the chronological order in his treatment of the war debt. Wisconsin was very prompt in providing funds for putting its troops at the service of the Federal Government. By an Act approved April 13, 1861, the legislature authorized the issue of $100,000 worth of bonds provided that the President should call for troops. These bonds were to be of the denomination $1,000, payable in five years and were to bear interest at six per cent, payable semi-annually. They were not to be sold below par. By an Act approved April 16, the amount of the bonds was increased to $200,000.28 On April 15, President Lincoln called for troops, and in May the Wisconsin legislature authorized the million dollar loan. Owing to the par clause, it was found impossible to float the $200,000 loan. Up to September 30, 1861, only twelve of these bonds had been sold.20 Prior to January 1, 1862, owing to the unsettled state of the money market, the officers of the state found it difficult to sell bonds at par and at the same time get full payment down, but after that date no difficulty was experienced.30

While in all probability the difficulty just noted was due in the main, if not entirely, to the unsettled condition of the money market, Governor Harvey thought that another cause was to be found in the financial misfortunes of Wisconsin municipalities, many of which were hopelessly in debt. State Treasurer Hastings shared this belief of the Governor's. In his message of 1862, Governor Harvey spoke at some length of public debt. In his opinion the state had benefited greatly from the clause in the constitution prohibiting, except for war purposes or public defense, the contracting of a large state debt. By 1862, the state had constructed buildings for a capitol,* state prison, and humane institutions at a cost of only $773,516. These buildings had been paid for by an annual tax equal to the interest on a

28 Laws of 1861, chs. 239, 307.

2 Secretary of State's Report, 1861 (in section on State Loan). 20 Secretary of State's Report, 1862, 903.

The main part of the Capitol was begun in the territorial period. In 1838 Congress appropriated $20,000 for its completion, but owing to a wrong application of the funds the building remained unfinished until 1844, when the County of Dane completed it at a cost of about $2,000. Hunt's Merchants Magazine, XXXIX, 64.

million dollars. He was certain that the buildings would have cost much more if they had been built with borrowed money, because of the speculative character of the times and the extravagance that characterizes the expenditure of money borrowed on public credit. The Governor declared that more than onehalf of the sums spent for University buildings had been paid for interest and that the debt of the University was increasing yearly. Apropos of the recklessness of local communities in plunging into debt, Governor Harvey spoke very highly of the wisdom of the framers of the constitution in forbidding the use of state credit in the furthering of internal improvements. He said, "Had our constitution permitted the use of state credit for works of internal improvement, we can at this day scarcely form an adequate idea of the pressure of interests that would have combined to plunge the state into debt. In the past era of speculation, our people were well nigh intoxicated with their schemes of improvement in the way of building railroads, etc." As it was necessary to get credit in some way for the promotion of such enterprises, upon the cities, towns, and land owners of the state had fallen the burden that the state had escaped. It may be noted in this connection that in 1859, certain railroads in Wisconsin proposed that the constitution be so amended that the state should guarantee the city, county, and town bonds issued in aid of various railroad projects. Such bonds amounted at that time to $7,265,000.31 If the railroads of Wisconsin could have been built with cash, no general disaster would have befallen them or their creditors, but they were built on credit, the character of which made necessary large discounts; extravagance marked the expenditure of the money obtained and private speculation among their managers completed the bankruptcy and ruin of the companies, in the failure of which municipal corporations and thousands of citizens became hopelessly involved. All the property in many cities was said to have been worth hardly their bonded debt and the unpaid interest thereon. Thousands of small farmers throughout the state were, as a result of having pledged support to railroad projects, hopelessly

31 The Bankers' Magazine, 1859, 717.

in debt. These misfortunes of citizens and municipalities, the Governor thought, affected adversely the credit of the state. He very wisely recommended a constitutional limitation on the power of counties, cities, and towns to contract debts.32

It may be observed that in 1872 another Governor laid much stress upon the reckless loaning of public credit to railroads by local administrative bodies. Some of the most promising towns in the state, in the expectation that a proposed railroad would add largely to their business and their prosperity had loaned far beyond their ability to pay, and, instead of being in the enjoyment of the expected advantages, were buried beneath almost hopeless debt. It was recommended that towns, counties, and cities be prohibited from contracting in aid of any railroad or other public improvement a debt in excess of five per cent of the assessed value of their property. The amendment of November 1874 went further and limited their aggregate debt for all purposes to five per cent of the assessed value of their property.

33

In 1862, the legislature authorized an additional war loan of $200,000. These bonds bore interest at six per cent, to be paid semi-annually. One half of this loan was payable July 1, 1887, and the other half, the first of the next July.34 By another law of 1862, the commissioners of school and university lands were authorized and directed to give preference to the bonds of the state in investing the trust funds.35 The $103,000 of war bonds remaining unsold were therefore converted into certificates of indebtedness to the school fund.

In the following year still another war loan was authorized. The governor, secretary of state, and the state treasurer were authorized to negotiate a loan of $350,000, the same to be at their discretion either in coupon bonds or in certificates of indebtedness to the school fund or in both. Another loan of $350,000 was authorized in 1864, the next year. Of this $700,000, the school fund took up $605,000. Of the $850,000

31 Governor's Message, 1862, 19.

33 Governor's Message, 1872, 23-24.

24 Laws of 1862, ch. 228.

Ibid., ch. 89.

38 Laws of 1863, ch. 157; Laws of 1864, ch. 360.

36

loan authorized in 1865, $623,000 came from the school fund. At the same time the school land commissioners invested $700 in outstanding state bonds; therefore, up to the end of 1865, the state had borrowed from the trust funds $1,331,700, which debt was in the form of certificates of indebtedness. In 1865 bonds to the amount of $548,800 were redeemed, leaving outstanding in the form of bonds $847,500, or a total debt of $2,179,200.

By June 1, 1866, the debt of the state to the trust funds had increased to $1,841,900 of which $478,900 had been paid for bonds and $1,363,000 for certificates of indebtedness, as provided by laws of 1863, 1864, 1865. The total amount of bonds outstanding had been reduced to $472,300. By the end of the year by redemption from the general fund the amount had been reduced to $440,100. The commissioners of school and university lands continued to invest in the bonds of the state, and in 1868 bonds to the amount of $27,000 were redeemed. By 1886 only $1,000 in bonds was outstanding and these were redeemed August 13, 1888. All of the bonds of the state had been either redeemed or converted into certificates of indebtedness to the trust funds. The total amount of this indebtedness was and is now $2,251,000.37

The direct war tax levied on Wisconsin and amounting to $519,688.67 was more than paid by expenditures of the state for the equipping of troops, by the fifteen per cent discount allowed for collection, by the amounts due from the five per cent land fund, and from the swamp land indemnity. The balance due the state from the National Government, the sum of $8,409.43 was paid April 25, 1888.88

For war purposes Wisconsin issued $1,400,000 worth of bonds, for which was received $1,110,229.69. The state taxes on account of the War amounted to $674,659.

The following exhibit shows the receipts and expenditures of the War Fund.39 No bonded debt has been contracted since the war debts were contracted.

Secretary of state and treasurer as disbursing officers

Repayment of loan from the general fund....

$ 184,187 26 2,702,703 00

779,608 21

Total

39 Ibid., 276.