FINANCES. During the colonial days the financial needs were very small, and for almost a century the budget increased hardly 50 per cent., being £4200 in 1660, £4500 in 1700, and £6500 in 1754. The main sources of in come were a poll tax and an export duty on to bacco. The Revolutionary War necessitated ex penses for whieh there was no provision in the system of taxation, and thus a debt of about $2,000,000 was created. The debt was assumed by the Federal Government in 1790, and until 1820 the debt of Virginia consisted only of $343, 139. borrowed only for purposes of the War of 1812. Several small issues of bonds were made between 1820 and 1335.
The idea of public improvements, which de veloped in the thirties, found enthusiastic sup porters in the State. In 1S35 the debt hardly amounted to $2.500,000, but during the short period 1835-38 $4,132,700 was loaned, the main purpose being the construction of canals and railroads. Although the debt had grown to $12, 000.000 in 1857. an act was passed in that year authorizing the Board of Public Works to borrow the necessary sums for the continuation of the works and the refunding of old debts. Within the ten years 1851-61 debts to the amount of 824, 538.716 were incurred, and at the beginning of the Civil War Virginia had a debt of more than $35,000,000, created for the purpose of construct ing railroads, canals, and roads. During the war the interest could not be paid and many more loans were made; and although these loans for w•ar purposes were repudiated by order of Presi dent Johnson, the overdue interest payments swelled the debt considerably. This interest was funded by special act in 1867, and for a year Virginia met her obligations, but, pass ing under military control, was again forced to stop payment of interest. By 1870 the debt had grown to 845,872,778. A complicat ing circumstance was the organization of the western counties into a new State—West Virginia. Virginia, holding that the new State was responsible for part of the debt, was willing to pay only two-thirds of the interest, namely, 4 per cent. An effort was made in 1871 to settle the question by a process of refunding the whole debt. One-third of it was designated as the part of West Virginia, and refunding of this part was made dependent upon settlement with that State. This settlement was never brought about and a third of the debt was thus absolutely repudiated. The rest of the debt was to be re funded at its full value and old rate of inter est, with the coupons made receivable for taxes. This clause is mentioned because it was the main political question in Virginia for the following twenty years. In the following year the 'read
justers.' i.e. those who advocated the necessity of reducing the debt of the State, were victorious and they began an attack upon the coupons. Re pudiation was impossible as long as the coupons were receivable for taxes, and this clause became the object of attaeks. Dozens of 'coupon-killing' acts were passed in 1872, 1873, 1876, and until 1885; most of them were declared unconstitu tional by the United States Supreme Court, which held that the objectionable clause was a contract and therefore inviolable. Every new derision of the Supreme Court called forth efforts of the Virginia Legislature at some 110V way of evading the obligations. The struggle lash51 for twenty years, and, though the State never• accomplished its purpose fully, it succeeded in putting so many diffi eulties in the way of receiving coupons for taxes that the amount received sank very low. Aleanwhile an effort was made to settle the question by the :met of Itbldleberger, which was vetoed by the Governor in I ss0. but passed in 1852. The basis of this net was repudiation of the unpaid interest since 1861, and the total just debt was ealeulated at $19,665.196. .1\lost of the bondholders refused to avail themselves of this offer. The final adjustment came only in 1892, after long negotiations between the State and a committee of English bondholders, when the total debt of the State which was not yet refunded, estimated at $28.000.000, was re funded at the rate of ID to 2S by 100-year bonds, bearing• 2 per cent. for ten years and 3 per cent. for the rest of the time. Since then Virginia has met her obligations. About $24,000,000 of bonds were refunded under this act for 10. Her present total debt cannot definitely be stated, but amounts probably to about $25.000,000. A great part of the Government income is as yet derived from a poll tax (S per cent.), a real estate tax (30 per cent.), and a personal property tax (11 per cent.), but many other sources have been added since the Civil War, as liquor and other li censes (18 per cent.), an inheritance tax, taxes on insurance companies, railroads, oyster grounds, etc. A considerable sum is received for hire of criminals. The main items of expenditures are interest on the public debt (22 per cent.), schools (20 per cent.). and hospitals (10 per cent.). The total receipts in the fiscal year 1901-02 amounted to $3,795.093 and the total expendi tures to $3,910,191. The balance in the treasury on October 1, 1902, was $739.392.