Staunton spectator. [volume] (Staunton, Va.) 1849-1896, 1889-12-11

principle and interest as now recognized
by the State, either for the reason that somt
of the features of the present.bill present
insurmountable objections, or because, il
their opinion, equity would demand the diff
ferent classes of the debt to be funded into
the new bonds of the different rates than
those laid down by the act of 1882, or fol-
any other reason, feel well satisfied that
such proposition would receive your re.
spectful consideration.
PROPOSITION OF THE LEGISLATIVE COMMIT.
TEE.
1t will be remembered that the joint COM
mittee of the Legislature of May, 1887,
went beyond the aot Of 1882, urged by a
great desire to settle great question, but
their offer was rejected and has no applioa-
ton now sayvto mark the extreme limit
the Statemight have then reached to effect
q settlement. The unanimous report from
this committee, which included the Lieu
tent Governor of the State and the Speak.
er of the House, fixed the basis upon which
they we're willing to recommend settle
ment of of the principal at 81, 227. 700,
with an annual interest Of $703, 552. (See
Senate document, page 81 The final prop
osition of the committee representing the
| Council of Foreign Bondholders was based
on debt of $32, 20S 900, carrying an an
nual interest of 1884, $3.50. (See Senate
document, page ~ The difference in the
amount of principal in these two PROPOSE
tions was $3.50, 300, and the difference in
the annual interest was S231, ,031.50
| From the treasury was paid during the
past year per cent. on 81, $50. 900 of the
new 3's, now in the hands of the public,
equal to $136, 500. The full interest paid to
colleges on bonds held by them amounted
to $142. 900; the interest on the bonds held
by the Literary Fund, $35, ,374, and in addi-
ton $237, 900, being the annual average for
the past two years of the coupons received
for taxes through suits in the courts.
| 1t has been shown that the State, after
parting with all its assets, under its present
offer to its cred itors would have to paw an
nually for interest $503, $50 20, which ex-
ceeds the sum applicable to that purpose by
$143, 128.12.
1t would not, therefore, be sound prop
ostion to entertain settlement carrying
larger amount of interest than that.
If the debt could be settled by recast of
the act of 1882, funding, for instance, consol
bonds at greater rate, and the 10-40's at
the same rate, aud the old unfunded and
peelers at less rate than provided for by
that act, while at the same time all old in
terest and outstanding coupons to January
1, 1890, could be funded al a rate 80 as to
bring the whole amount ofinterest the State
would have to pay under such an arrange
meat, within it's ability to do so, would
unhesitatingly recommend its acceptance
upon the part of the State, and I entertain
the hope that the bondholders may make
some such proposition to the General AS
sembly which will be satisfactory to them
and honorable to the State, and whose ob.
legations could be scrupulousiy guarded and
| faithfully carried out.
The refusal of the holders of bonds with
| tax-receivable coupons to fund them and
their persistent use of coupons for the pay
ment of taxes leaves the debt unsettled.
The acts passed by the Legislature to de-
feat the use of coupons have been partially
effective. The offer of the joint committee
in 1887 to the creditors was to fund the con-
soils at rs and pay per cent. interest Oh
same; to fund 10-40's at 63 and pay "a per
cent. interest on same, and to fund tax cou-
pous at so and pay 3 per cent. interest ON
same, and, in addition, to pay tho bond
holders so par cent. in cash for 81 ,000 600
coupons. The State could not renew this
offer now, and it is reasonable to assume
that the bondholders, in the light of the ex
psriencs of the past two years, might ex-
pect somewhat lower rate of funding. For
the past two years ending September 80,
1889, it has been shown that S237, 900 a
year has been forced inso the Treasury on
judgments fer taxes, while the tax coupons
maturing amount to 81 ,00S, 500 per auuum.
Whilst the forced receipt of these coupons
instead Of money for the taxes of the State |
has been source of great annoyance to the |
officers charged with the collection of her |
revenues, it has ia some measure diminish |
ad tha oh nf a n r,1fs fol
the same creditors and has resulted in no |
Immediate benefit to them, because the net |
sum realized from the sale of these coupons |
to tax. papers, after deducting the cost of
litigation TO them, is almost nothing.
The act OF 1882 requires cousois to be
funded at So, 10-40's TO be funded at 80,
and all old unfunded peelers and so on at
50. The equity of these rates of funding is |
not clearly seen. The holders of the old |
unfuuded debt have refused for seventeen |
years to fund, while many of the peelers are |
known to be lost. They do not enter into
the present contest with the bondholders. |
The bonds that are now pressing for settle
ment, held by the public, are, iu round |
numbers, S12, 100000 of consols with tax |
coupons, $4,000 900 of 10-4Os with tax
cou pons, and the $5, 800, 900 of tax coupons,
inclusive of those to mature on the 1st of |
January, 1890.
Let US suppose, by way OF illustration,
that the ccnsols were funded at 20 cents, |
equal to So, 030, 900; 10 40's were funded at |
go cents, equal to So. 900 900; S., 800, 900 of
tax coupons, up to 1st of January, 1890, at |
40 cents, So, 800, ,00O-making a total of
$14, $50, 900; per cent. interest on same |
would be $449, 500. In other words, if this |
proposition was accepted by the bondhold
ers who hold tho above classes of bonds it |
would undoubtedly settle the debt, as the |
litigation has been for them aud for them |
alone.
We have seen that the State has had to |
pay $237, 600 per annum for the past two |
years for coupons forced into ths Treasury |
on judgments, SO that this matter might b, |
narrowed to the simple proposition whether
it would be wiser, if the opportunity offer
ed, for the State to pay $163. 900 a year
more than we are now paying, rather than
to continue to be defendants in litigation
that promises TO outlive the present genera
tion. Il wilt be for the Legislature to de-
tarmine what new revenue can be counted |
on to produce this s163, 900 par annum.
In the above calculation of bonds those
held by the colleges are not given, because
NOT in the contest. The State pays them
and, it is supposed, will continue to pay
luttn JH0 iull lOJcTeSb Sl7S1 OUO.
Nor are the 81 $50, 900 new SIS in the |
hands of the public included. The State
has no contest there either, but is paying |
on them now an annual interest of $780,
500.
By the exercise of the greatest economy,
by searching your tax laws closely, by the !
examination of tax laws of other States, |
there may be found some new subjects of |
taxation, by which sum greater than the |
one have stated would represent it's inter- |
est ability, after providing for those ex-
penses absolutely necessary to carry on the |
State government. But until this is done |
it is not safe or sound to make any compact |
carrying greater obligation than you have |
in sight the means to provide for.
In concluding this portion of my message |
l cannot too strongly impress upon you the
Importance of resolutely refusing to enact
any legislation which will produce an in
crease in our list Of expenses. Your bill |
appropriating the public revenue should