Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1874-04-02
Thursday Maraing, April q, 1874.
STATE FlNANC ES.
MESSAGE FROM THE COVER
NOR TO THE LEGISLATURE.
COMMONWEALTH OF VIRGINIA,
GovERNoR's OFFICE, =
RICHMOND, March ~, 1874

Gentlemen Of The Senate and House o,
Delegates:
The financial condition Of the State
has been ,nisapprehended and misre
presented in many quarters. it is to
be regretted that not only the ability
but the willingness of the State to car
nv present Indebtedness has been dis
cusscd, and the opinions and purposes
If both the legislative and exeeu
i've departments have been subjected to
Injurious miscoustruction among some
of our creditors. In transmitting to
The General Assembly the accompany
ing memorial of the Council OF Foreign
Bondholders | take occasion to hote
prevailing errors and to submit some
considerations bearing upon the solu
ton of our finan"ial difficulties.
Public opinion is believed to have
been misled partly by erroneous repres
entations of our condition abroad and
partly by miscalcnlations and errors OF
the authorities Of Virginia in the past
The act of the Both of March, 1871,
commonly known as the funding act,
Internationally pledged the State to
the regular and punctual payment
,hencetorward of full interest ON the
debt, which it provided to be newly
funded III the name of Virginia. This
action appears to have been taken
without dive calculation of the dimin-
ishea resources of the State and with.
out needful inquiry into the question
of her ability to bear at this time the
great burthen thus assumed. One OF
the consequences is that, although the
people are discontinued and suffering
under existing taxation, rendered very
grevious to them by their impoverished
circumstances, yet the revenues of the
State have not enabled us to fulfill our
new obligation. The practical opera
ton of the funding act has proved
equally unsatisfactory to both debtor
and creditor. No question or doubt d
the validity of the act itself, and nc
impugnment Of the motives Of its au-
thors, is implied in the declarati on
that its passage was surprise to oul
own people; that it was precipitately
enacted, without such previous. com
munication and understanding between
the Commonwealth and her creditors,
such discovery OF the situation, such
disclosure of the impoverished and almost
ruined condition of the State, as Our
own necessities, due respect for the
creditor class and established usage in
like cases imperatively demanded. The
result is that the he bonds, designed
to pledge the State to the payment OF
no more than two thirds of the original
debt, maintain no higher market value
that that repeatedly reached and even
exceeded prior to the date Of the fund
ing act, by the old obligations which
represented the whole debt. The re
suit is that while our own people are
more dissatisfied than ever, the com
plants of creditors are increased instead
OF being quieted.
Important principles of finance, as
well as the facts Of the situation, seem
to have been lost sight OF in the pass
age Of that act. The object of para
. mount importance with public creditors
in any adjustment of Indebtedness such
as ours, is to obtain perfect security
tor the principal sum agreed upon, and
especially for the regular and punctual
payment of accruing iDterestin the best
medium and at the most convenient
places. Certainty and punctualiiy Of
payment are of greater importance to
them than the amount to be paid. The
half OF debt perfectly secured and &C.
oompanied with. undoubted guarantees
for the punctual payment OF interest is
far more desirable to the best classes of
capitalists, and has greater power and
value in financial circles, than the
whole debt inadequately secured, and
with uncertainty, irregularity and dis
trust attending stipulated payments OF
interest.
CLAasIFIcATIoN OF THE DEBT.
Such is the disposition of the indebt
edness of Virginia, resulting from the
funding act and from subsequent legis
lation modifying or partially suspend
ing its operation, that it may be doubt
ed if any other arrangements short OF
the horrible alternative of reputation,
could well be worse or less satisfactory
to all parties concerned. A more un-
certain, confused and incongruous ar
rangement could scarcely be made with
public creditors. The principal sum OF
the debt intended to be assumed by the
funding act, the interest pledged upon
WHICH is now overdue, is $3O,478,74l,
SO. exclndingethe amount assigned for
settlement with West Virginia. The
evidences of this debt proper belong
to many and mu,tiforln classes. as fol
lows:
lst. Coupon bonds payable to bear
er with coupons receivable in payment
OF taxes.
I'd. Coupon bonds payable to order,
with tax paying coupons.
Sd. Registered bonds convertible
into coupon bonds, with tax paying
coupons.
4th. Coupon bonds payable to bearer
with coupons not receivable for, tax
es.
5th. Registered bonds not convert
bic into tax paying coupon bonds.
9th. Sterling debt funded.
7th. Sterling debt not funded.
9Th. Sterling bonds not required to
be funded
9Th. A5;confused mass OF. old and
unfunded certificates of debt, OF large
amount, issued under a long succession
Of acts of Assembly, at different times,
in divers forms and for various pnr
poses, and disi-isie isiso Bs4isf' slasscs !;
bnt IL respect to which important par
sis.l ars c4.nnvt be stated, because 10