The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1881-02-10
The Debt of Virginia.


fully understood by those are Interested
either as citizens or claimants, that 1 should not
think 1t n cessary for me although have been the
! 'best abused man that ever had anything to do
with Virginia affairs) say word up n the su
ect II the persistent misrepresentation OF The par
| ty of which General Malone is the acknowl edged
| leader were not creating an opinion among many
fair minded men that, under the act of 1879, intus
tice had been done both to the State and the bond
! holders, and that the Readjustcrs, as they call
| themselves, are debt-payerS and not regulators
| The debt of Virginia is ante-war debt The
| bonds, which represented 1t sold at par or at
| premium, chiefly In England, when the State had
high credit and the proceeds thereof were ex pend
ed in improvements almost entirely within her
| present domain, and which added largely to her
| wealth Up to the time OF the attempted secession
of the State the interest her bonds was PROMPTLY
paid During the war. and for years after, pay
| mentS were suspended: through which long period
| the bondholderS having conhdenre In the honor Of
Virsinians waited patiently for resumption Moth
Ing was done however, If have not been misnform-
ed, until 1871 when the first funding act was passed
by which the bondholders were offered in exchange
for their bonds and interest new bonds bearing the
rate of interest C per cent for twothr1s If
the amount and certificates, to be paid by the State
| Of West Virginia for the other one-third A, the
bondholders mad patiently waited for the action of
the State Tor 80 many years. compromise that only
| offered two bonds for three-the cert fcates to be
paid by west virginia being considered OF little IL
any, value they have never, in fact, been recogniz
ed by that statel-was not regarded by them with
ravor but the state was sovereign and had suffered
severely by the war, and the new bonds were to
be secured by coupons which to be receivable
| for taxes the compromise was accepted and
| changes were rapidly made, until the next meeting
| OF the Legislature, when the provision of the act
|
BILE for taxes was repealed. AT the time of the repeal
fthis provision about two thirds OF the outstanding
bond had been exchanged-ande exchanges were Up
! idly going on--large amounts being Richmond
and on their way from Europe L speak advisediy
when say that act of any State Legislature, mp
that timt, ever regarded as being unjust and
shameful as this act Of the Va Legislature, which VI
| olate a compromise rendered to the bondholders
and gave to those who had exchanged their bonds
decided advantage over those who had not The new
bonds, the coupons (which are receivable for taxes
! are now known as s'Gonsols'-the 'tPeelers.
the provisions referred to- the tax collectors were in
sIructed not 10 receive the taxreceyable cou pons
for taxes, but the Supreme Court of the State an
nuled these instructions by deciding that the COM
promise between the Stateand the bondholders, as
far 1t had been carried out, contract which,
under the Constitution of the United States, could
not be violated.
Thus matters stood until the passage of the Act of
| 1879. The Stale paid the coupons of the Consol
bonds by receiving them in payment of taxes, but
as they were available only TO payers the bond
holders were under the necessity OF selling at dis
count OF from 10 to - per cent, thus realizing
thing over per cent on their six pei cent bonds
the difference being absorbed by payers and mid
dlemen. On the Peeler bonds nothing was paid. The
situation was, therefore, Improbable and dishonor-
able as raf as the state was concerned and aogeth
er unsatisfactory to the bOndhOlders, especially
those for whom nothing was being done.
NIB M'CULLoCHs CONNECTION WITH THE DEBT.
! may say here that my connection with the yir-
sin1a debt did not, as General Malone intlmates,
commence in the winter of 16iS-79. In the summer
OF 1874 happening To be in the United Sates,I WENT
at the request of the council of foreign Dondnuders
10 Richmond, to confer with the officers Of the
in behaIfof the holders OF the feeler BONUS and to
obtain from them, IL IL should be possible, prOpo
s1tton for settlement. Hound Governor kemptr and
the other officials sensittvely alive TO the Injustice
when these bondhoIders were suffering,
ous to remove The disrepuLe that rested upon the
state; but they could speak for the Le5isa-
ture and could speak autuuritatvely Tor the
| oundhUiderS, nothing was accomplished at the in
terview IL is proper for me to say, however, that
the sentiments they expressed and the feelings they
| manifested were entirely honorable to them,
such warranted me i'll saying to the council that
justice TO the longsunering bontholders would mol
long be delayed. In The spring OF lol5 or 1876
| called upon Ill London by General Richard Taylor
who informed me that, although he was not author
lied to commit the State TO anything he haa been
requested by the Governor to ascertain If anything
and what, could be done toward settlement with
the holders of the unsecured bonds and that he
should be very glad II would aid him in bringing
about a conference with Them. did SO aid him. "a
numDer of cOnferences were had, at all OF which
present, and after prOtracteu discussion, Genl
Taylor was authorized by most Of the large bond
holders to say the Governor and the Legislature
that compromise might be effected ON the terms o.
per cent certain number Of years, and per
cent thereafter for two-thtrds Of their present hold
ings and interest, the other onethlrd to be repre-
scented by the usual West Virginia certificates.
Such was the proposition Of the unsecured bond
holders as nearly as now recOllect it, What became
II the proposition, l have not been informed. My
impression, however, Is, that although General Tay
Jr thou hi ii a fair one he found the LEGISLATURE,
when it next convened, in such frame of mind
mat he did not even present it, and so the State,
While paying interest twolhrds of her bonds
in full, by receiving the tax receivable coupons for
taxes, st IL enduring all the odium and disgrace
If default and reputation. All forms of her debt
form in their character but by the acts of her Leg
stature there had come to be two classes, differing
widely in their value.
In the fall of 1877 a Legislature elected with
especial reference to the settlement Of the debt ana
this body passed bill in the session Of lSlI-'7e
known the Fowler bill, which failed from Its
nature It's advocates doubtless expected 1t would to
receive the slightest attention at the hands Of the
C editors, and The situation remained unchanged.
THE ACT OF MACRH %, 1879.
In 1878 the council of foreign boz dhoders of London
England and the Funding Association ofthe United
states at the request of many creditors and of State
officers and Legislators who felt that IL necessary
do something more effective than had heretofore
done, consented to as Intermediates between
the state ana her creditors for the purpose of
1ertaking adjustment of the debt upon terms
that should be equitable for all parties concerned
as the exceptional conditions OF the debt would al
low. AT the meeting Of the Legislature of that year,
after delay the whole subject OF the State debt
was referred TO q Joint finance committee, winch
framed bill, which passed after prolonged
IND exhaustive debates by vote of more than two
thirds of both houses, although majority Of the
members were Re-adiusters. This bill, now known
the Act of March 2r, 1872 recognized the fun prin
;tpa of the represented by ConsoI and Peeer
bonds. and onehaIf of the overdue interest," making
an aggregate of about $1,000 900, and authorizes
the issue OF new bonds bearing interest at ) per
per for ten years, cent for fifteen, and
per cent for ten years (One-thrd of the untunded
Jonds to be deducted as had been done with those
previously funded to be exchanged for the old ones
The Act provided that the bonds must be presented
or refunding in such way that the proportion OF
lass II (PeelerS) refunded shall never exceed in
mount onethird "a of the total amount refunded
until SIS 900 900 have been retired. The purpose of
funued, indeed, funded at all, unless twice as
many con sol holders could be induced to come in.
10 this extent injustice TO the Peeler holders was
perpetuated. 1t the subject of vigorous protest
the part of the representatives of the bondhod-
ers but never f. ON any source was there given the
slightest encouragement that beterterms would for
moment be considered.
The sympathy for Peeler-holders, now so feelingy
expressed by the Re-ad1 usters, found no expression
then. Numerous amendments to the bill were offer
ed some OF them In good fa1th, others simply OBJ
Structive, but took the form of just relief for
the holders of the unsecured bon 81 While this bill
lid not ought to have been the case, wholly re
lieve the Peelerholders from the disadvantage I'M
posed upon them by former unju legislation, II
| greatly bettered their condition and was eagerly
accepted by them They were in the position OF
second mortgage bondhOlders, and were forced to
GUY out make with the holders of the prior
| liens Both methods pursued went in
the market aud bought consOls, others AIDE such
.esslons toConsol holders as enabled them to fund
together and the price of Peelers advanced from 81
to 40 cents the dollar. The weigh and influence
of the associations, far they could exered,
we're exerted in ia yor of the Peeler bonds The en-
ieavor made to secure for tn I'm - per cent OF
the principal and interest of their old bonds in the
orties, they called, and for the most
! part this figure obtained But Conso-hOlders
felt secure and long years Of waiting without any
recognition had made the holders OF Peelers eager
to convert. SO that in many cases they made great
or concessions, but few, II indeed any realized les
than IS cents in bonds for their Old ones. Netth
| er Of the associations through whom the funding
done ever made for either class of bonds.
AS every circular issued will show, tenders were
invited from the holders of both classes of bonds,
and far as these offerings could be matched ii
was done and new bonds We're delivered to each at
the rates fixed by the depositors. If their views
could not be met their bonds returned without
| charge. There is not TO be found the holder OF
| Peeler bonds who funded who would be willing to
| resume his former position and take back his old
bonds, the sole security of which now seems Co be
the fa tn nd honor of the Read If such there
| be, he find parties who Will gladly make the
| exchange, and pay him a handsome bonus. The
charge made by the associations for conducting the
operations of funding was per cent, from which
paid brokerages agents fees amt other expenses
| so that the net rate realized was something less
than three-eightS of per cent and this the
| sole source of profit Never so hard and diff
cult work done by responsible parties for small
| consideration 1t is not true, has been charged
that my associates agents offered "A cents, or any
other price for bonds when presented. Their Oper-
ations were limited above described. But it is
idle time in detailed denas; the silly and
malicious talk about the motives, methods and
gains of the associations is absolutely false and Is
known to be so by many OF those who are RESPONSE
BILE for it,
| Under the Act of March %, 1879 the funding
carried rapidly that over eight millions of dol
lars were converted in the first five months, which
very considerably reduced the burden of the debt.
Had the refunding been allowed to go on, ii would
have been long since completed, and the annual in
terest charge would have been $4,000 instead of
81, 610.794, it is, 1t shown conClusively
the time of this settlement, by figures which
be reproduced and cannot be controversial, that
without increasing the revenues of the State, the
expenses of the Government and the demands of the
school funds could be met, the interest the debt
paid and handsome surplus left to be applied to
a red Of n rel q hn