Year: 1874

In reply to prominent banker and bond
holder of New York, Governor Kellogg yes
terday sent the foil owing letter:
SIR acknowledge with pleasure the re-
ceipt of your friendly communication of
the thirteenth instant. l have no doubt
that number of the present holders of
bonds popularity believed here to be of
fraudulent origin were innocent purchasers,
and that you were one Of that number. OF
course. the validity of these bonds is a
point to be determined by the courts. !
think all those questioned are now before
the Supreme Court. or soon will be, and an
early decision may be expected.


acknowledge that there is grea. force in
much that you state. The funding plan we
adopted was considered. after mature de.
liberation, the best for all concerned. 1t
was not expected that it would meet with
the approval of all, or that we should carry
it out without opposition. The opposition
thus far developed, however, do not con-
slider formidable. because it is, think, mis-
directed and not well founded. 1t is not



up the funding bill. by injunction or
otherwise. on the ground that it is
violation Of contract. 1t is not a question
of contract. but Of fact. We admit the
contract as to valid bonds, but demonstrate
through the only competent judge in such
cases, namely, the Legislature, that we are
not able to pay in full, and tender our cred
itors in compromise the best settlement we
are able to make. A rule from the federal
court, should one be obtained, will not
change this status. 1t will not create more
property from which to obtain a revenue,
or collect more taxes than we propose.


imay say to you that committee Of
eminent citizens, whom 1 appointed last
summer to classify and report upon the
State debt, earnestly recommended that
the debt be funded at the rate of fifty cents
on the dollar, and that the constitutional
limit be fixed at $l2000,O00. The Chamber
of Commerce, after much deliberation, re-
commended also that the debt be funded at
fifty cents on the dollar in six per cent
bonds. l felt, and stated in my message,
tL<to W Q hou ehO opiAiey W poy AAoAS, NAu
strenuously adhered to my recommends
ton that the debt be funded at sixty cents
on the dollar in seven per cent bonds, be-
lieving that thereby we could more nearly
attain exact justice between the creditors
and the State.


For the past two or three years the public
mind OF this State has been educated BY
tax resistance and otherwise to regard the
Reputation Of large portion Of the State
debt as proper and necessary measure. l
was and am firmly convinced that but for
some such course as we have taken in the
be forced into virtual reputation. This
scheme will undoubtedly receive the ap-
prevail of nine-tenths of the people of the
State. They will cheeriully pay the neces-
sary taxes. We are cutting down State TX.
penditures largely and economizing in
every possible way. l regard the present
as the most difficult portion Of our pathway.
believe our creditors will approve OF our
policy when they shall come fully to under
stand it.


The law you propose 'providing for pay.
ment of interest on sixty cents only of the
face of the bonds, for five or ten years, then
resuming in fully. while it might not be OBJ
jectionable if concurred in by all our cred
itors on an agreement to accept it and with.
draw all opposition, is. fear. impractica-
BILE. for the reason that such concurrence
can not be had. and for the further reason
that it is too late to pass it at this session
Of the Legislature. which terminates in a
few days.


The case Of Illinois is. / respectfully sub
nit. not analogous TO ours. Their debt was
small. comparatively. and their taxable
property rapidly appreciating. 1t is the
reverse here. So much Of our assets have
been totally destroyed, and the deprecia
tion of the remainder has gone go TAR, that
i: is hopeless to seek a remedy by postpon-
ing payment to a future day. That might
delay misfortune. but would not avert it:
and when it came it would fall with ac.
cumulated weight upon both debtor and
creditor.


1t may be true that our action in regard
20 the funding bill will be made pretext
for sustaining the pretens.ons Of political
enemies in Washington. Ii is said much OF
the opposition manifested there has had
the same or a similar foundation. Could
our credi tors procure the setting aside of
the present State government they might
write ''repudiation" acros. their bonds and
consign them to the waste basket.


Very respectfully, your obedient servant.


WILLIAM p. KELLOGG.