Indiana State sentinel. [volume] (Indianapolis) 1841-1853, 1846-03-19
The State Debt law and the Bond
hoIdprS.

Morning NelrS of March I'd, the following very IN
teresng extract IN relation to the law passed last
winter for the adjustment of the claims OF our Bond
holders We presume it will be read with pleasure
by those editors and gentlemen in various parts of the
State who have warmly opposed the law since its
actment though they will perceive that the objections
here urged in direct opposition to the objections
made by the strongest opponents of the bill here to-
wit: that the law did not provide for transferring
half of the entire debt from the State to the w. & E.
Canal
''The law passed at the recent session of the Leg
isature of Indiana in relation the compromise of
the State debt runs the risk Of being rejected by the
bondholders The general principles that 1t involves
at variance with those which have hitherto been
uncompromlsingy adhered to by the creditors of the
United States defaulting governments In Europe.
The chief of these is that it virtually recognizes the
principle of reputation. In the case OF Illinois,
an instance, sine qua the part of the credi-
tors was, that the whole deb: should be recognized,
and levied and paid to discharge the interest pro
rata the cbOle debt far the taxes would 90.
The canal and its lands then taken additional
security the faith of the State by the bondholders.
the old evidences of debt remaining intact and they
advanced 81 100000 TO give value to that additional
security, which placed IN trust of persons not
citizens of Illinois. In the case of Indiana, all this
Is reversed. The law expressly provides that the
nal and Its property shall not be additional security,
but shall be the sole resource for the payment of
hafthe State debt or So 600 900 the State beng reeds-
ed from the obligation. The transaction Is simply
this the bOndholders give s., 600 for the canal
In bonds and spend 81 go 900 more in cash. making
S7,250, 900, equal to the whole cost of the Erie
nal for work which, when completed, will have
pacity only for forty ton boats, whereas the Illinois
canal has a capacity for one hundred and fifty ton
boats and when this money is expended, the bond
holders will not it they have only to get their
money back and re-deiver the work to the State. 1t
Is at milo for
a railroad on the route of the canal which would do
more business, and remain their own property for
The incipient step in carrying out tie law
1T stands is for bondholders who hold evidences
of debt against the State TO surrender One-hat and to
receive in return, obligation of the State, but
simply certificate emitting them to be reimbursed
out of the canal after they have advanced the money
to finish it, providing it yields any revenues, and not
to be reimbursed at al unless the means can be ex
tracted from the canal This resolves ITSELF then,
simply into grant by the State the bondholders,
of the privilege of their putting S22oOO0O into the
hands of citizens of Indiana to be spenton the canal
OH condition that they recognise the Reputation by
the State of half her debt. This is the spirit of the
whole law, and it tacitly estimates the capacity of
the Wabash canal to be equal at least to that of the
Erie. If no other reason influenced the bondhOlderS
against It's ratification, it would probably be this In
direct endorsement of reputation. There now
held In London not far from Fol, 900 900, $3.50.
O000O0, of the debts of different governments that
of the United States and about five times the of all
the debts now delinquent in the Union If we consider
Pennsylvania and Illinois restored. To recognize,
therefore, IN Indiana release from the pghted falth
of the State would at once establish precedent mat
would sweep the board. Spain Greece. Mexico Peru,
and all the long list of bankrupt governments would
CAIN similar indulgence. 1t was on this principle
that recognition of the debt and taxation to pay 1t,
made the primary step in the Illinois negotiation
and the want Of it In the case OF Indiana may lead
to the rejection of the law"
That some OF even majority, of our Bondholders
should be more or less dissatisfied with the compro
mise of the State Debt, as stated in the above ex-
tract is to us not at all surprising. But do not
see how they can object to the law on the grounds
suggested by the Nel1S for several reasons The first
of these is the fact as understood by the legislature
and people of Indiana, that the Bondholders will
ling to make such compromise through their author
lied Agent Mr. Butler. The compromise having
been made by him in their behalf it is too late
for them to complain of the terms of settlement Or
if they complain ALL they must address their
plants to their Agent, and not to u.s. We have done
all that is within our ability to do and more than
some think could be exacted from the grounds
of abstract justice. Our people committed great
error in running deeply in debt-therc is doubt
about that Our creditors We're full much to blame
the sake of gain and the speculation turned
unfortunately, they must suffer the penalties common
70 imprudent creditors well thoughtless debt
ors This was not matter of choice but of necessity
with both parties and as in the case of individuals,
the only alternative which presented itself
promise or reputation To avoid the latter, we have
given our creditors all that possessed the
or ability to give. More than this it would have
been folly to PROMISE as it would have been out Of
the question perform We recognized not only the
validity of the bonds honestly obtained of our fund
commissioners, but a large amount also of which
it is admitted we swindled by the decoy-dUcks
of the United States Bank There is in all this no.
thing which virtually recognizes the principle
of reputation" The State acknowledged all the
claims made against it, just well unjust, SIM
ply because they legal on their face. 1t had not
the ability or means for their full payment and there
fore it accepted the proposal of the Bondoders them
sslres 10 take all the available means possessed
for the payment of half of the principal and in
terest and to rely upon taxation for the balance By
this arrangement we shall ultimately cancel the en-
tire debt and interest, without the reputation of
dollar. If in agreeing to it, Indiana has made bet
ter bargain than made by Illinois, Bondhold
ers may console themselves with the reflection that
stipulated to do. than if had proposed to do
than appeared clearly to be within present and
prospective ability
We have said that this compromise adjustment
was made by an Agent of the Bondholders with their
full knowledge and appreciation. We believe this to
have been DONE on their part Acknowledgement