New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-08-12
BAD FAITH OF STATES.

LETTER FROM EX-SECRETARY MCCULLOUGH.
A REJOINDER TO HIS CRITICS IN INDIANA-THs
UNFORTUNATE COMPROMISE By WHICH THE
REPUTATION or TIE STATE HAS BEEN sULITED-
REPUTATION OF DEBTS BY MINNEsOTA-THE
OHIO CANVASS.
TO the Editor Of The Tribune.
SIR: My letter upon Indiana, it seems brought
down upon me denuncstion and abuse from num-
Der of the journals of the State. This does not
trouble me in the least. But while l care
nothing for the abuse, the charge Of will
full Misrepresentation of facts, which | under
stand has been brought against me. ought not to DO
permitted to pass without attention. 1t will be
borne in mind that | said expressly that did not
undertake to state the facts with precision and that
I remarked that the compromise when it was made
was considered q fair one. Since that letter was
written have received number of communications
aud sundry documents by which the statements L
made instead of being dsprOved arc in all important
respects confirmed
THE INDIANA COMPROMISE.
From these communications and documents, and
from facts well known to the public, it appears that
at the time of the compromise the State was in debt
some ST. 200. 900 Oh bonds n small part of which
were issued for tho construction Of the Wabash and
Erie Canal, known as wabash and Erie Canal
bonds the rest for the construction of various works
throughout the State, and known as internal I'M
proyemcnt bonds" that the State failed to pay the
interest Oh these bonds after they were issued,
in consequences of which they became greatly depre-
caed-so deprecated rs 10 have little, II any, vaue
in the markets some of them having been sold, as
was Informed at tho time, for less than the amount
of the interest which had accrued upon them; that
in 1916 some six or seven years after the detauit
occurred u strong pressure having been brought to
pila "a
effected underline provisions of what is known as the
Butler bill'' between the State and majority OF
her bondlolders represented by Mr. Charles Butler,
by which compromise the State agreed to give cx-
change for the outstanding bonds State stock"
hearing interest at tine rate of five per cent per an
NUN for onc-half of the principal of the bonds and
canal stock" bearing the rate of interest for
the other half and for Onchaif OF tine accrued ln-
tcrest on the bond, Estate stock bearing 2l2 per
cent interest, and for the other half of the accrued
interest canal stock hearing the same rate OF in
tcrest; the canal stock" to be exclusively and only
a charge upon the Wabash and Eric Canal, for the
extension of which from Lafayette to the Ohio River
the bondh0lderS, for their better protection, were
called upon to contribute literally. To this com
promise there was a condltiOn-that the State
would make TO provision thereafter to pay
either principal interest On any Internal
Improvement bonds until the holders thereof
should have first surrendered their old bonds
and received therefor the above-named 4" stock;'
and there was aso a provision that nothing should
be paid to the holders of tho stock" until bonds to
the amount of 900 OOO exclusive of interest, had
been surrendered for cancellation according to the
terms of the compromise 1t further appears that
the canal chiefly by reason of the competition OF
railroads. which were made alongside within COM
b;atnu Of tba al an act
qucntly passcd-which roads have added largely to
tho wealth and taxable property OF the Statc-has
become of little if of any value, that the charge
upon it, in favor of the holders of the canal
stock" is worthless 1t further appears that small
number of the bondholders declined to become par
ties TO the compromise and to surrender their bonds,
and that John ". Garrett president OF the Batl-
mora and Ohio Railroad, who was a holder OF
some of the bonds issued for the construction OF the
canal, began suit against the trustees, who
under the terms OF the compromise had charge OF
the canal for tho benefit of the holders of the canal
stock" and Obtained "a decree, declaring that these
Wabash and Erie Canal bonds were q lien upon the
canal prior and paramount to the claim OF the tris-
trees that to prevent sale OF the canal under TINS
decree, the Legislature made provision for the pay
ment of the bonds on which the decree had been OBJ
tained and at q special session in 1872, by an act
declaring emergency" provided for the pay
ment in full. principal and interest of all the bonds
issued prior to IS H. and not surrendered under the
Butler BILL whether lien upon the canal OF not.
Hence it appears that the holders of the Inter
nal Improvement bonds, constituting much the
larger part of the State debt, received for
half OF their claims, canal stock" exclusive
" charge upon the canal, which was
already subject to lien in favor of the original
canal bonds that the holders of the last-named
bonds or most of them, surrendered their prior
lien upon the canal and accepted JOINT lien with
other bondholdcrs who had no claim upon it, and
that the holders of all the old bonds who declined to
surrender them have received or are to receive pay
mcnt i'm full while those who did surrender their
bonds have received but fifty cents on the dollar Ii
will be noticed that no provision made for the
payment of the bonds which had not boon surren-
dcred under the Butler bill until tho courts bad de-
ced that part of them at least were "A lien prior TO
the canal stock" Now ask whether my previous
statement in regard TO the compromise OF the state
with .cr creditors is liable to the charge of being
either false or unfair; whether what l omitted III
that statement was favorable to the state. And
would further AJAX whether in view of all the fa't IT,
a. now stated il was creditable thing or a fair
thing for the people of Indiana not only 20 decline to
do anything themselves for the unfortunate holders
of the canal stock" but 10 undertake to prevent
ANYTHING from being done for them hereafter by an
amendment OF the Constitution OF the State abso-
lutcly prohibiting it!
AN ENGLISH VICTIMS VIEW.
Iregret that have been called upon to refer q
second tmc to this unfortunate compromise, for I'M
fortunate regard it, rot only for the creditors but
for the otherwise fair reputation of the State-a
reputation which, apprehend, is rs dear to Inc as
il is to those who have assailed me. Indiana has
scarcely suffered more by failing TO pay her debt in