Year: 1877

NEW YORK, March II, 1877.-Hon.
John II. Savage, Chairman--Dear Sir:
have the honor to hand you annexed
copy of the award of the Committee of
Arbitration, to whom has been submitted
the question; "What would be, under
all the circumstances, a fair adjustment
of the public debt of Tennessee?"


In the long and earnest discussions
which have taken place between our re-
spective committees upon the subject, it
gives me pleasure to attest the fact that
while no member has withheld the most
UNI eserved expression of his individual
views, they have all done it with the ut
most courtesy, with an evident apprecia-
. tion of the magnitude of the question
and with manifest desire to reach a
satisfactory and equitable result.


In presenting to you the award of the
committee, allow me to express the
hope that it may secure the important
end desired; that the adjustment of the
debt of your great State will be followed
by similar proceedings in the other
States, and that by the removal of this
dark cloud from the reputation of the
country, we may begin an era of pro-
gress, prosperity and mutual respect
which will be perpetual.


With the highest regard, have the
honor to be, sir, respectfully yours,


GEO. S. Coz, Chm'n


The proposition referred to by the
arbiters is as follows:


To the Honorable the General Assem-
bly, of Tennessee. After a prolonged
discussion with your committee, when
all the circumstances under which the
debt was incurred, the peculiar condi-
tion of affairs in the State, together
with itspresent ability and its future re-
sources, were most fully and carefully
considered, the undersigned have come
to the deliberate conclusion that, after
adding all the arrears of interest and the
interest to accrue up to July 1, 1877, the
then aggregated amount of the State
debt should be readjusted by the issue
of new bonds at the rate of sixty (6O
per cent. of the total of the amount;
{. e., for every sum of one thousand
| Is 1 ,0OO) dollars then due, new bonds
should be given in exchange and full
settlement for six hundred $4,000 )dollars.
or for proportionate amounts.


The new bond to bear interest at the
rate of 6 per cent. per annnm from the
1st of July, 1877, payable semi-annually
| in the city of New York, the first pay
| ment to be made on the 1st of January,
1878, and the principal be made payable
also in New York in thirty years from
date. The interest coupons to be receiv-
ed by the State for all taxes due it.


This compromise the undersigned con-
slider, under all the circumstances and
necessities of the case, to be just and
fair, both to debtor and creditor.
To facilitate and promote the prOpos-
ed change, which it is assumed the cred
itors will generally accept, this commit
tee recommend that a new and uniform
issue Of coupon bonds of the required
amount, in denominations of one thou
sand, five hundred, and one hundred
dollars for convenient exchange, be pre-
pared, ready for delivery from time to
time as wanted in the city of New York
and that they be there held, subject to
the countersign of an agent appointed
under their supervision if so desired,
With the approval of the Governor of
the State. The new bonds to be regis
| tered in the name of the owner if prefer
red, and the old bonds, as exchanged,
/ to be cancelled and Immediately return
! ed to the Treasurer of the State.


| In the conclusion to which this COM
mittee have, with much deliberation,
arrived, they have not lost sight of the
fact that a sovereign State, although be-
yOnd the reach of legal coercion in the
fulfllment of its obligations, is for that
very reason under stronger bonds to
maintain its credit inviolate. Nor have
they been undmindful of the honorable
character and ueblemished credit which
the great State of Tennessee has always
enjoyed in the markets of the world, of
her reputation for the possession of
large resources, nor of the humiliation
she must consequently endure by any
compromise whatever of her legal obi.
cations All these considerations have
been duly weiged, and they have induc-
ed this committee to carefully inquire
whether it was not expedient for them
to recommend, instead of SO large a re-
duction of the principal of the debt, a
concession for few years, in the rate of
interest as proposed in plan submitted
to the Governor by holders of a large
amount Of bonds, in the belief which is
generally entertained among the credi-
tors, that a gradual recovery of wealth
would accrue to the State and enable
her at an early day to resume payment
in full. This mode of adjustment would
be obviously more gratifying to State
pride, and would also afford greater
present relief, and it would certainly be
more acceptable to the majority of
bondholders.


But after attcntively considering the
statements of your declaration respect
ing the sad results of the war, the de-
rangement and general impoverishments
it has entailed, and the widespread dis
organization existing in all the indus
tries of the people throughout the State,
we have been constrained to the decis-
ion that a summary reduction of the
debt, even to the large extent indicated,
is the best course for all parties concern
ed, and that, unless the Legislature shall
now see its way clear for a settlement
more favorable to the bondholders, it is
both its duty and its policy to adopt the
award which this committee most res
pectfully and conscientiously tender to
them and their creditors, as the result of
their best judgement.


This committee regard it as most i'm