From Slave South to New South: Public Policy in Nineteenth-Century Georgia

By Peter Wallenstein | Go to book overview
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16
RAILROADS, DEBT, AND RECONSTRUCTION

PUBLIC DEBT posed a central concern throughout the postwar era. In the prosperous 1850s, payments on the debt had taken the largest portion of each year's budget, but the burden was not onerous. When the war ended, Georgia was much poorer and the debt much larger. In view of the widespread poverty and disrupted economy, moreover, the state at first borrowed funds for its operations rather than levy taxes.

Many Georgians, like other Southerners, looked to the railroads to alleviate their poverty and bring prosperity. With private resources scant and in disarray, many saw state aid as imperative. Although efforts to secure such aid involved both Republicans and Democrats, some members in both parties thought it beyond Georgia's means and sought to restrict it. Regardless, aid to railroads led to even greater state debt.


Presidential Reconstruction and the State Debt

Though the legislature levied property and poll taxes for 1866 and again for 1867, the state borrowed most of its money in both years. Meeting shortly before the legislature, the 1865 constitutional convention authorized the issue of $500,000 in five-year bonds to finance normal expenditures "until by the collection of taxes the State may dispense with loans," and an additional $100,000 to repair the Western and Atlantic Railroad. As the comptroller general had advised, the railroad's income was responsible for paying interest and principal on those bonds.1 The legislature soon approved a much larger bond issue.

Together, the convention and the first postwar legislature authorized the issue of bonds amounting to $3.6 million, a figure one-third greater than the state's entire prewar bonded indebtedness ($2.7 million in 1860). Although the convention repudiated the Civil War debt, it continued to recognize the prewar debt and overdue interest left unpaid during the war. New debt from the years 1865-67 meant that, when Republicans came to power in Georgia in 1868, the state debt was approximately $6 million.2


The Western and Atlantic

The Western and Atlantic Railroad, keystone of the state's financial system in the late 1850s, produced little revenue during the early

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