There was no cash available even to pay the ordinary expenses of the State government.

Because of this lack of funds the government had to be carried on on a credit basis,--that is, by the issuing of notes or warrants based upon the credit of the State.

These notes were issued at par to the creditors of the State in satisfaction of the obligations.

In turn they were disposed of at a discount to bankers and brokers by whom they were held until there should be sufficient cash in the treasury to redeem them,--such redemption usually occurring in from three to six months, though sometimes the period was longer.

To raise the necessary money to put the new machinery in successful operation one of two things had to be done: either the rate of taxation must be materially increased or interest bearing bonds must be issued and placed upon the market, thus increasing the bonded debt of the State.