The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1874-03-28
2 5UFEfsaeU III 3 Ssfi5-
= .--~.;s ~g.4.a.--------,r.-- .gsss','
Finances and Debt Of the State.
CoxMosrEAIsa5 op yIndMA,1
# sGovERNoa's OErToE.
: RICHMOND, 9th March, 1874:

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CoxMoxrEAISa5or ymatNA,1
# GovERHoa's OFTTCE, I
: RICHMOND, 9th March, 1874
Genslenen Of The Senate and House o. De'e-
T TSa'e financial condition Of the state has
been misapprehended and -mlsEepresenI =. !.
In many quarters. 1t Is to be regrettea tpat
not only the ability, 5ut the willingness, o,
the State to carry present indebtedness, HAS
been discussed, and the opinions ana puh.
poses of both the legislative and eXeeutiSe
departnents have been subjected 10 ,nJurl.
| ous rnisconstructon, among some OF our
creditors. In transmitting to the GENERA.
Assembly the accompanying men"'at ", ",
The council of foreign bondholdcrs, l Mne
occasion to note prevailing errors ana 70 SUI
NIT some considerations bearing upon tne 'o'
luton of our financial difficulties.
| Public opinion is believed 10 nave . Geun
misled partly by erroneous representations
| of our condition abroad, and party ny luz .,
calculations and errors OF the autnoi nn.t y,
| Virginia in the past. The act OF Tug oo.u -
March, 1871, commonly known us LUZ sur .u Nv The
act, Internationally pledged tne oIase w
regular and puuctual payment :, ,rovi.
of full interest on the deot "nicn ~ P Viz.
ded to be newly funded in the na, lnvo % boon
gipia. This action appears ~ 10. ua d;,r,;n
taken without due Calculation VI tao ,,,;,bo,,,
ished resources Of the STATE, at.u w bar
lneedful inquiry into tue quest'on ILL., ~ hur .
then tins assumed. One of the conse'
nuances is that. although the people are dis'
contented and suffering under existing tax.
alton rendered very grievouS to them Dy
their imnoyerished circumstances. yet the
rnvanues of the State have not enabled US 10
fuI6 orr new obligations. The practlcal
oneration of the funding act has proved
erually unsatisfactory to both debtor and
or. dior. No question or doubt OF the valid
ity of the act itself, and no impugnment OF
the motives of its authors, is implied in the
declaration that its passage was surprise
TO our own people; that it was prcclDitately
enacted, without such previous communion
ton and understanding between the Com
monwealth and her creditors, such discovery
of the situation, such disclosure of the i'm.
poverished and almost ruined condition OF
the State, as our own necessities, due re-
spect for the creditor class, and established
usage in like cases imperatvely demanded.
The result is that the new bonds, designed
to pledge the State to the payment OF no
more than tWo-tbirds of the original debt,
maintain no higher market value than that
repeatedly reached and even exceeded prior
to the date of the funding act by the old
obligations which represented the whole
debt. The result is that, while our people
are more dissatisfied than ever, the com
plants of creditors are increasing 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 passage of that act. The
Object of paramount importance with pub
lie creditors, in any adjustment of indebted
ness such as ours, is to obtain perfect secu-
rity for the principal sum agreed upon, ana
especially for the regular and punctual pay
mcnt of accruing interest, in the best me-
dunn aud at the most convenient places.
Certainty and punctuality of payment are Of
greater importance to them than the amount
to be paid. Tue half of debt perfectly Sc
cured, and accompanied with undoubted
guarantees for the punctual payment of in
terest, 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 uncer-
tanty, irregularity, and distrust attending
stipulated payments OF interest. =,
Such is the disposition OF the indebted
ness of Virginia, resulting from the funding
act and from subsequent legislation modify
ing or partially suSpendng its operation,
that it may be doubtful if any other
arrangement, short of the horrible alterna-
tive of reputation, could well be
worse, or less satisfactory to all parties con.
cerned. A more uncertain, confused, and
homogeneous arrangement could scarcely be
made with public creditors. The principal
sum of the debt intended to be assumed by
Che funding act. the interest pledged upon
which is now overdue, is $50, ATS, Ill.49, eX-
GLIDING the amount assigned for settlement
with West Virginia The evidences of this
debt proper belong to many and multlform
classes, as follows: .."
1T, Coupon bonds payable to bearer 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 4tb, Coupon bonds payable
TO bearer with coupons lot receivable for
taxes; 9Th, Registered bonds not convertible
into tax-pay ing coupon bonds; 9th, Sterling
debt funded 7th, Sterling debt not funded;
Stb, Sterling bonds not required to be fund
ed;. 9th, A confused mass of old and. un-
funded certificates OF debt, of large amount,
issued under long succession of acts of
Assembly, at different times, in divers
forms, aud for various purposes, and di-
yisable into many classes, but in re-
spect to which important particulars cannot
be stated, because nowhere to be found in
the public offices; and finally, two distinct
classes of new fractional certificates Of debt.
Not included in any OF the foregoing classes,
are alleged unascertained liabilities incurred
by the State as guarantor. These varied
evidences of debt have different values The
best of them usually rate in our own markets
at about fifty cents on the dollar. Even TO
the most favored of the numerous classes OF
creditors, the present arrangement Is
full of disadvantages aud difficulties Holders
of bonds with coupons due and receivable
for taxes find their coupons heavily depre-
ciated and incapable of being passed into the
hands of the tiX-coilector except With eX-
pensiye crcuty and with serious inconye-
niepce and loss. The means which some
allege to be etfectual for further obstructiDg,
or for preventing the future use OF such
coupons in payment of taxes, serve only to
show how inadequate ana unwise are the
securities hitherto devised for even the most
favored class of creditors, and how such in
sufficient and precarleuS guarantees for In
terest must expose US TO increasing COM
plant and distrust as long as the present aa-
justment stands uDcOrrected.
Let it not be supposed that any action CAL
cuated to further impair the value of tax
paying coupons is intended to be here either
suggested or countenanced; on the contra
~, it will be presently shown that the true
interests OF all parties demand that every
ground of controversy and distrust between
debtor and creditor should be forever re-