TENNESSEE. 



709 



their exhausted resources. On the 26th of De- 

 cember, 1876, a letter had been addressed to 

 Governor Porter by a number of the largest 

 holders of the bonds of the State, expressing 

 their confidence that an equitable adjustment 

 could be made, and recommending that the 

 Legislature appoint a commission to proceed to 

 New York and confer with the creditors, with 

 a view to bringing about such an adjustment. 

 In response to this proposition, a resolution was 

 adopted by the Legislature on the 27th of Jan- 

 uary, inviting the creditors to submit some def- 

 inite plan, and the following proposition was 

 subsequently made : 



1. That the revenue laws of the State shall bo 

 amended so that the collection of taxes may be as- 

 sured at the time or times when they become due, 

 and that at the smallest possible cost to the tax-payer. 



2. That the reforms proposed and recommended 

 to the Legislature by your Excellency in regard to the 

 cost ot' county criminal prosecutions be enacted into 

 a law. 



3. That the expenses of the State Government be 

 reduced to as low a figure as is consistent with the 

 maintenance of its dignity. 



4. That the present rate of taxation be maintained, 

 and that the other sources of revenue be not dimin- 

 ished. 



5. That the State levy annually a special tax of one 

 mill on the dollar of taxable property, the proceeds 

 of which, in every year, together with any surplus 

 revenue, shall be used in the purchase, cancellation, 

 and destruction of the new issue of bonds which it is 

 proposed herein to issue for existing bonds and past- 

 due coupons, and the coupons of July 1, 1877. 



6. That the Legislature pass a law authorizing the 

 funding of all outstanding bonds of the State, of all 

 past-due coupons thereon, and of the coupons which 

 will fall due on July 1, 1877, into new bonds of the 

 State, bearing date July 1, 1877, and having 50 years 

 to run to maturity, bearing interest for a period of 

 five years from their date, at the rate of three (3) per 

 cent, per annum ; for a period of five years thereafter, 

 interest at the rate of four (4) per cent, per aunum ; 

 for a pjriod of five years from the termination of the 

 last-mentioned period, interest at the rate of five (5) 

 per cent, per annum ; and thereafter, until mttturity 

 and payment, interest at the rate of six (6) per cent, 

 per annum. Interest on each bond to be paid serni- 

 annually, on January 1st and July 1st, in every year 

 from and after its date, and the coupons evidencing it 

 to be receivable by the State for all taxes and dues 

 payable to the State ; said bonds to be for $100, $500, 

 and $1,000. 



Meanwhile, on the 25th of January, a meet- 

 ing had been held at the Clearing-house in New 

 York, " to consider the embarrassment of the 

 several Southern States which are in default, 

 and to devise a plan for the readjustment of 

 their debts, and for the restoration of their 

 credit." Five bank officers, Geo. S. Coe, J. D. 

 Vermilye, B. B. Sherman, B. B. Comegys, and 

 Enoch Pratt, were appointed as a board of ar- 

 biters to act in the matter. Tennessee was in- 

 vited to cooperate with them in securing an 

 adjustment of the State debt, and the Governor, 

 in a special message on the 22d of February, 

 recommended that a committee be appointed to 

 meet the arbiters, and lay before them statis- 

 tics of the debt and resources of the State, and 

 such other information as might be pertinent, 

 and receive such propositions as they should 



see fit to make. After considerable discussion 

 a commission of five members was authorized 

 and appointed to proceed to New York on this 

 mission. The commission reached New York 

 on the 7th of March, and hud it- first confer- 

 ence with the arbiters on the following day. 

 The first proposition made was that the whole 

 debt be funded in fifty-year bonds, bearing in- 

 terest at 3 per cent, for the first five years, 4 

 per cent, for the next five years, 5 per cent, for 

 the third five years, and 6 per cent, thereafter. 

 The commission protested against this as not 

 sufficiently liberal to the State, and subsequent 

 consultations resulted in a proposition for the 

 adjustment and compromise of the whole debt 

 by the issue of new bonds at the rate at 00 

 cents on the dollar, the bonds to run 80 years, 

 and bear interest at the rate of 6 per cent. Thia 

 plan was reported to the Legislature by the 

 commission on the 19th of March without rec- 

 ommendation. The propriety of accepting or 

 rejecting this plan of adjustment was discussed 

 for some time, and several propositions were 

 submitted in the Legislature, but no definite 

 action was taken before the adjournment. The 

 subject continued to occupy attention and to bo 

 publicly discussed. Several prominent citizens 

 of the State, including D. M. Key, Postmaster- 

 General of the United States, and Senator I. 

 G. Harris, wrote letters, advocating at length 

 the acceptance of the plan of adjustment. Fi- 

 nally, the Governor called a special session of 

 the Legislature, to begin on the 5th of Decem- 

 ber, the object of which was thus expressed in 

 his proclamation : 



1. To consider the recommend -ition made hy t!>6 

 arbiters at the c 'iitVn-neo held at New York in March, 

 1877, to adjust the State debt by the issuance of new 

 six per cent, bonds at the rate of sixty per et-nt. of 

 the total amount of principal and post-due interest. 



2. To levy a tax sufficient to meet the interest on 

 the new bonds ; to provide a sinking fund fur the ex- 

 tinguishment of the debt, and for the more efficient 

 collection of the revenue. 



3. To provide, by appropriate legislation, for the 

 expenses of the General Assembly. 



In a message submitted on the first day of 

 the session, the Governor reviewed the action 

 which had been taken, and urged the accept- 

 ance of the plan of the arbiters. lie said that 

 the debt was nearly all incurred prior to the 

 civil war for purposes of internal improvement, 

 and there was no question of its validity. Ha 

 also contended that the State would bo amply 

 able to meet it- obligations under the pro* 

 posed adjustment. The question speedily arose 

 whether the Legislature could do more, under 

 the call of the Governor, than to act upon the 

 single proposition submitted, in view of the 

 fact that the constitution provide* thai, hen 

 the Legislature is convened by the (iovi-rnor 

 "on extraordinary occasions," he shall "UI 

 specifically the purposes for which they are to 

 convene ; but they shall enUr on no legislative 

 business except that for whi--h they were ep> 

 cifically called together." The qoertion wa 

 referred to a special committee, a majority of 



