A settlement of the debt now seemed hopeless. It was the chief issue in the gubernatorial campaign of 1880. The divisions of the Democratic party resulted in the election of the Republican candidate, Alvin Hawkins. The newly elected Legislature was also favorable to the bondholders. A bill was passed which provided for the funding of the outstanding debt at par, the new bonds to bear interest at three per cent., and the coupons to be receivable for taxes. The bill was signed by the Governor, and went into effect in April. It was regarded as a great triumph for the bondholders, but their rejoicing was short-lived. In a test case the courts decided the law unconstitutional, on the ground that the Legislature could not make a valid contract in which the coupons should be receivable for taxes for ninety-nine years. This decision reopened the whole question.
The defeat which the Democrats had suffered in 1880 served to unite them in 1882. Their candidate, W. B. Bate, was elected Governor. In his message to the Legislature, Governor Bate marked out a plan for the settlement of the debt which was finally adopted, by an act passed March 15, 1883. This act declares: “That the State will pay in full the bonds held by Mrs. James K. Polk, and all bonds held by educational, literary, and charitable institutions in the State; that it will pay in discharge of its just obligations, what is known as the State debt proper in full, less war interest; and that in compromise of the remainder of the debt, known as the railroad debt, it will pay one half of the principal and accrued interest by issuing therefor bonds of the State bearing interest at the rate of three per cent. per annum.”
The “carnival of crime and corruption” described in the preceding chapter was not confined to the Legislature. Similar scenes were enacted in almost every county and city in the State. As the suffrage limitations placed upon the ex-Confederates applied to all elections, the Radicals were in complete control of these local governments. The large municipalities, such as Memphis, Nashville, Chattanooga, and Knoxville were the greatest sufferers from the rule of irresponsible and corrupt officials.
In 1867, a carpetbagger, by the name of Alden, had succeeded in being elected Mayor of Nashville. Having filled the city council with his political followers, most of whom were non-property-holders, he entered upon a course of open and systematic public plunder, which made even the State administration stand aghast. The city treasury was soon drained. The tax rate was enormously increased; but as this did not suffice, checks, warrants, and due bills, made out in the name of the city, and payable to bearer, were sold to street shavers of notes at any price they could bring. Bonds were also issued. As these evidences of indebtedness multiplied, the market quotations for them declined.