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 These institutions are managed by trustees who are appointed by the governor. In addition to the usual method of employing convicts in the penitentiary or on state farms, Alabama, like other southern states, also hires its convicts to labour for private individuals. Reports of abuses under this system caused the legislature in 1901 to order a special investigation, the results of which led in 1903 to a new system of leasing to contractors, whereby the prisoners are kept under the direct supervision of state officials. In this same year a system of peonage that had grown up in the state attracted wide attention, and a Federal grand jury at a single term of court indicted a number of men for holding persons as “peons.” Many similar cases were found later in other southern states, but those in Alabama being the first discovered attracted the most attention. The system came into existence in isolated communities through the connivance of justices of the peace with white farmers. The justices have jurisdiction over petty offences, of which negroes are usually the guilty parties, and the fines imposed would sometimes be paid by a white farmer, who would thus save the accused from imprisonment, but at the same time would require him to sign a contract to repay by his labour the sum advanced. By various devices the labourer would then be kept constantly in debt to his employer and be held in involuntary servitude for an indefinite time. The “peons” as a rule were negroes, but a few white ones were found; and in several instances negroes were found holding members of their own race in peonage. A law forbidding under severe penalties a labourer from hiring himself to a second employer without giving notice of a prior contract, and an employer from hiring a labourer known by him to be bound by such a contract, had aided in the development of the system, though it had been enacted for a different purpose. The Federal authorities, as soon as the existence of peonage became known, took active measures to stamp it out, and were supported by the press and by the leading citizens of the state. Up to 1907 the state licensed the sale of liquor, and liquor licence fees were partly turned over to the public school fund; there was a dispensary system in some counties; and in 1907 one-third of the counties of the state (22 out of 67) were “dry.” Besides, saloons had been forbidden within 5 m. of certain churches and school-houses, so that liquor was sold scarcely at all except in incorporated towns, where in many cases local dispensaries were established. In the 1907 state legislature a county local option bill was passed in February, and immediately afterward the Sherrod anti-shipping bill was enacted forbidding the acceptance of liquors for shipment, transportation or delivery to prohibition districts, and penalising the soliciting of orders for liquor in “dry” districts with a punishment of $500 fine and six months’ imprisonment with hard labour. In a special session of the legislature in November 1907 a law was passed forbidding the sale of liquor within the state, this prohibition to come into effect on the 1st of January 1909.

Finance.—One-half of the income of the state is derived from general taxes, the other sources of revenue being licences, a special school tax, poll tax and the lease of the convicts. The state debt, for which legislative corruption in the years 1868–1872 was largely responsible, amounted on the 1st of October 1906 to $9,057,000. Measures for its refunding, but not for its extinction, have been taken. The constitution of 1901 prohibits the increase of the debt for any other purposes than the suppression of insurrection or resistance to invasion, and the assumption of corporate debts by cities and towns is also restricted. All banks, except national banks, are subject to examination by a public official, and their charters expire within twenty years of their issue.

History.—The first Europeans to enter the limits of the present state of Alabama were Spaniards, who claimed this region as a part of Florida. It is possible that a member of Panfilo de Narvaez’s expedition of 1528 entered what is now southern Alabama, but the first fully authenticated visit was that of Hernando de Soto, who made an arduous but fruitless journey along the Coosa, Alabama and Tombigbee rivers in 1539. The English, too, claimed the region north of the Gulf of Mexico, and

the territory of modern Alabama was included in the province of Carolina, granted by Charles II. to certain of his favourites by the charters of 1663 and 1665. English traders of Carolina were frequenting the valley of the Alabama river as early as 1687. Disregarding these claims, however, the French in 1702 settled on the Mobile river and there erected Fort Louis, which for the next nine years was the seat of government of Louisiana. In 1711 Fort Louis was abandoned to the floods of the river, and on higher ground was built Fort Condé, the germ of the present city of Mobile, and the first permanent white settlement in Alabama. Later, on account of the intrigues of the English traders with the Indians, the French as a means of defence established the military posts of Fort Toulouse, near the junction of the Coosa and Tallapoosa rivers, and Fort Tombecbé on the Tombigbee river. The grant of Georgia to Oglethorpe and his associates in 1732 included a portion of what is now northern Alabama, and in 1739 Oglethorpe himself visited the Creek Indians west of the Chattahoochee river and made a treaty with them. The peace of Paris, in 1763, terminated the French occupation, and England came into undisputed possession of the region between the Chattahoochee and the Mississippi. The portion of Alabama below the 31st parallel then became a part of West Florida, and the portion north of this line a part of the “Illinois country,” set apart, by royal proclamation, for the use of the Indians. In 1767 the province of West Florida was extended northward to 32° 28′ N. lat., and a few years later, during the War for Independence, this region fell into the hands of Spain. By the treaty of Versailles, on the 3rd of September 1783, England ceded West Florida to Spain; but by the treaty of Paris, signed the same day, she ceded to the United States all of this province north of 31°, and thus laid the foundation for a long controversy. By the treaty of Madrid, in 1795, Spain ceded to the United States her claims to the lands east of the Mississippi between 31° and 32° 28′; and three years later (1798) this district was organized by Congress as the Mississippi Territory. A strip of land 12 or 14 m. wide near the present northern boundary of Alabama and Mississippi was claimed by South Carolina; but in 1787 that state ceded this claim to the general government. Georgia likewise claimed all the lands between the 31st and 35th parallels from its present western boundary to the Mississippi river, and did not surrender its claim until 1802; two years later the boundaries of the Mississippi Territory were extended so as to include all of the Georgia cession. In 1812 Congress annexed to the Mississippi Territory the Mobile District of West Florida, claiming that it was included in the Louisiana Purchase; and in the following year General James Wilkinson occupied this district with a military force, the Spanish commandant offering no resistance. The whole area of the present state of Alabama then for the first time became subject to the jurisdiction of the United States. In 1817 the Mississippi Territory was divided; the western portion became the state of Mississippi, and the eastern the territory of Alabama, with St Stephens, on the Tombigbee river, as the temporary seat of government. In 1819 Alabama was regularly admitted to the Union as a state.

One of the first problems of the new commonwealth was that of finance. Since the amount of money in circulation was not sufficient to meet the demands of the increasing population, a system of state banks was instituted. State bonds were issued and public lands were sold to secure capital, and the notes of the banks, loaned on security, became a medium of exchange. Prospects of an income from the banks led the legislature of 1836 to abolish all taxation for state purposes. This was hardly done, however, before the panic of 1837 wiped out a large portion of the banks’ assets; next came revelations of grossly careless and even of corrupt management, and in 1843 the banks were placed in liquidation. After disposing of all their available assets, the state assumed the remaining liabilities, for which it had pledged its faith and credit, and these form a part ($3,445,000) of its present indebtedness.

The Indian problem was important. With the encroachment of the white settlers upon their hunting-grounds the Creek