Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1892-01-08
vIRGINIA'S DEBT SETTLE
MENT.
The Deferred Certificates.
WILL THE STATE DISCHARGE ITS oBrIGA-
TONS AS TRUSTEE NOW THAT IT HAS
SETTLED IT'S DIRECT INDEBTEDNESS
SOME LAW POINTS.


SOME LAW POINTS.
New York Sun.
The virtual settlement of the Virginia
State DC bt, which now requires only an
act of the Legislature to become effective
and binding upon all parties, has natur-
ally aroused fresh interest in the status
and prospects of the deferred bond GER
| tificates of the State. The Olcott COM
mttee, which devised and negotiated the
settlement of the debt. did not touch the
deferred certificates for the reason that
they are not a direct obligation of the
State. but are of the nature of a trustees
certificate. These certificates, which
were issued by the State of Virginia, rep
resents an equal amount of the original
bonds of the State, which are held by 1t
in trust Tor the holders of the certificates.
They were issued in 1871, when the State
debt was funded. In effecting that oper-
alton the State arbitrarily apportioned
certain part Of Its bonded debt. namely,
about one-tbird. as an obligation of West
| Virginia, which was part OF the old
sta to when the bonds were originally is
sued.
At that timo Virginia said to her credi-
tors that she would give them new six
per cent. bonds for two.tbirds of their
claims, and deferred certificate for the
other third, which was claime1 to be the
approximate amount that West Virginia
should pay. The terms of the settlement
were that the State should keep one
third of the old bonds surrendered to it
alive and uncancelled, and that it should
act as the trustee or agent of the holders
of the deferred certificates issued therefor
in effecting a settlement with West Vir-
ginia Each State has appointed tvarious
times committees OF commissioners to ne
gotiate the matter, hut nothing has come
of their desultOry efforts.
The amount of deferred certificates is
sded is nearly s12, 100000, of which about
100000 is in the hands of the public
and the remainder is held by the State.
The public holdings are mainly in this
city, though a few of the certificates are
held abroad. For the purposes of concert
ed action the great majority of the bonds
have been pooled for number of years.
| The amount so pooled Is about IS 5OO,OOO,
and the Farmers Loan and Trust com
pany is the custodian of it. Every effort
| that has been made of late years to in
duca the State of Virginia to discharge
the obligations of the trust which she
herself created has provoked the reply
that the State could not with good grace,
or logically, proceed against a sister State
to collect an Indebtedness as long as she
herself was IN arrears on her obligations
The State officials have promised al along
that whenever they should succeed in
settling their own debt they would then
be in a position to proceed aga nst West
Virginia and would do so. That time
now seems to be at hand, and consequent
" the holders of the deferred certificates
are naturally beginning to look after their
interests.
That the State of West Virginia is be-
holden for part of the principal repre-
sented 10y the deferred certificates, and
the State of Virginia for the balance, and
that the last named is under obligations
as trustee to enforce the claims of the de-
ferred certificate holders, appears clear
from the record, When Virginia adopted
her present constitution iu 1869, she de-
clared in that document that; THE
General Assembly shall provide by law
for adjusting with West Virginia the pro-
portion of the public debt of Virginia
proper, to be borne by the States of Vir
ginia and West Virginia" 1t will be OBJ
served that the provision OF the constitu-
ton is man datory.
West Virginia recognizes its obligations
in the premises when it adopted its con-
stltutiOn in 1868 IN the following article,
which was ratified by popular vote: IAN
equitable proportion of the debt of Vir-
GINA, prior to January l, 1861, shall be
assumed by this State, and the Legislature
shall ascertain the same as soon as
may be practicable, and provide for the
liquidation thereof by sinking fund
TO pay the accrulng interest, and redeem
the principal within thirtyfour years"
The question came up in Congress when
the bill providing for the admission of
West Virginia into the Union was being
considered, and 1t was answered partly
by the article of the constitution quoted
above, and also by the second section of
one of two ordinances adopted by the
Wheeling convention, which put into
operation what became known as the
"Restored government of Virginia" This
convention took the first steps toward
organizing West Virginia as state, and
the section of the ordinance adopted by
it read as follows: "The new State is to
be charged with all expenditures by Vir-
ginia with her territory, and with just
proportion of the ordinary expenses of
the State government siuce any part of
the debt was contracted, and credited
with the moneys collected within the
same period from the counties composing
the new State"
Tie obligation of the present State of
Virginia to act as a trustee for the hold
ers of the deferred certificates is set forth
on the face of those certificates, which |
were issued from the Treasurer's office
under the funding act of 1871. The GER
tifcates reads
"This is to certify that there is due
unto...... $.----., being ore-third OF
bond KO..,,.., surrendered under the |
provisions of an act, &C., and amounting |
to S.----.
Payment of said one-third will be pro-
vided for 10 accordance with such settle
ment as shall hearafter be had between !
the States of Virginia and West Virginia
in regard to the public debt of the State
of Virginia, and the State of Virginia holds
the said bond, so far as unfunded, in trust
for the holder of this certificate"
The bonds which have been pooled in
the Farmers Loan a. Trust company are
represented 10 negotiations WIFI tue StaIe
of Virginia by committee consisting Oft
II. C. FahUstock, vice-president of the
First National Bank OF this city; j. c.
Maben and Richard Itvin. A member of
this committee said yesterday, in speak
ing of the fresh effort now about to be
made to effect a settlement for the defer
red certificate holders, that it should be
understood in the Rrst place that their
efforts were 10 no way antagonistic to the
Olcott settlement. "0n the contrary
he said, "our success depends very large
ly, if not entirely, upon that settlement,
Tor Virginia has conteDded all along that
she could not enforce her claim against
West Virginia until she bad adjusted her
owa differences with her own creditors.
That doubtless is one reason for Yirginia's
another 10 that when adjust
ment is effected between the two States,
Virginia will have TO assume whatever
difference there may be between the
amount found to be due from West Vir-
ginia and the amount which she abitra.
rily charged to that State in 1871.
&C. &. ~ N Wat virginia 10 oonqaruad