The Daily state journal. [volume] (Alexandria, Va.) 1868-1874, 1874-03-27
STATE FINANCES.
MESSAGE FROM THE GOVERNOR
TO THE LEGISLATURE.
COMMONWEALTH OF VIRGINIA, /
GOVERNORS OFFICE, I
RICHMOND, 9th March, 1874.

: Inc illancial C0ndltlOn OF tne state ne
been Inexperienced and misrepresente
in many quarters. 1t is to be regrette
that, not only the ability, but the willing
J ness OF the State to carry present indeb
edness, has been discussed, and the opir
ions and purposes of both the legislativ
and executive departments have been SUI
Jected to injurious misconstruction anon
some of our creditors. In transmitting t
the General Assembly the accompanyin
memorial of the counsel of foreign bond
holders, take occasion to note prevailin
errors, and to submit some consideration
bearing upon the solution of our fnancia
difficulties.
| Public opinion is believed to have beel
mlsled partly by erroneous representation
OF our condition abroad, and partly by mis-
calculations and errors of the authorize
OF Virginia in the past. The act of tn,
50th OF March, 1871, commonly known a
the funding act, Internationally pledged
the State to the regular and punctual pay
ment, thenceforward, of full interest on tn,
| debt which it provided to be newly funded
in the name of Virginia. This action APP
pears to have been taken without dua cal
culation of the diminished resources of the
State, and without 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 peo-
pie are discontinued and suffering under
existing taxation, rendered very grievous
to them by their impoverished circumstan.
ces, yet the revenues of the State have not
enabled us to fulfill our new obligations.
The practical operation of the funding act
has proved equally unsatisfactory to both
debtor and creditor. No question or doubt
OF the validity of the act itself, and no i'm
pugnment of the motives of its authors, is
implied in the declaration that its passage
was surprise to our own people; that it
was precipitately enacted without such pre-
vlous communication and understanding
between the Commonwealth and her credi-
tors, 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 new bonds, designed to pledge the
State to the payment Of no more than two
thirds 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 obliga
tons which represented the whole debt.
The result 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 passage of that act.
IN oh mi of, 49,
public creditors, in any adjustment of in
debtedness such as ours, is to obtain per-
feet security for the principal sum agreed
upon, and especially for theregular and pune
tual payment of accruing interest, in the best
medium and at the most convenient places.
Certainty and punctuality of payment are
OF greater importance to them than the
amount to be paid. The half of debt
perfectly secured, and accompanied with
undoubted guarantees for the punctual pay
ment of interest, is far more desirable to
the best classes of capitalists, and has
greater power in financial circles, than
the whole debt inadequately secured, and
with uncertainty, irregularity and dstrust
attending stipulated payments of interest.
Such is the disposition of the indebted
ness Of Virginia, resulting from the fund.- |
ing act and from subsequent legislation |
modifying or partially suspendng its opera.
ton, that it may be doubted if any other
arrangement, short of the horrible
of reputation, could we'll be
worse or less satisfactory to all parties
A more uncertain, confused,
and homogeneous arrangement could scarce
ly be made with public creditors. The
principal sum of the debt to be assumed
by the funding act, the interest pledged
upon which Is now over due, is $30,47S,-
TAI 40, excluding the amount assigned for
settlement with West Virginia. The evil
dences of this debt proper belong to many
and multiform classes, as follows:
l. Coupon bonds payable to bearer
with coupons receivable in payment of
taxes.
2. Coupon bonds payable to order with
tax-paying coupons.
3. Registered bonds convertible into
coupon bonds with tax-paying coupons.
4. Coupon bonds payable to bearer
with coupons not receivable for taxes.
5. Registered bonds not convertible into
tax-paying coupon bonds.
6. Sterling debt funded.
Z. Sterling debt not funded.
s. Sterling bonds not required to be
funded.
8. A confused mass of old and unfunded
certificates of debt, of large amount, is
sued under long succession of acts of
at different times, in divers
forms and for various purposes, and divis-
BILE into many classes, but in respect to
which important particulars cannot
to be stated because nowhere to be found
in the public offices and, finally, two dis
tlnct classes of new fractional certificates of
debt. Not included in any of the forego-
ing classes, are alleged unascertained liabll-
tiles incurred by the state as guarantor.
These varied eviderces of debt have differ
ent 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 pres
ent arrangement is full of disadvantages
and difficulties. Holders of bonds, with
coupons due and receivable for taxes, find
their coupons heavily deprecated and in
capable of being passed into the hands of
the tax-collector, except with expensive
circuity and with serious inconvenience and
loss. The means, which some allege to be
effectual for further obstructing or for pre-
venting the future use of such coupons in
payment of taxes, serve only to show how
inadequate and unwise are the securities
hitherto devised for even the most favored
class of creditors, and how such insufficient
and precarious guarantees for interest must
expose us to increasing complaint and dis