APPENDIX TO THE BREVIER LEGISLATIVE REPORTS.
TWELFTH VOLUME.
The Wabash and Erie Canal--Debate in Continuation.
HOUSE OF REPRESENTATIVES.
TUESDAY, January 24, 1871.[IN CONTINUATION FROM NEAR THE BOTTOM OF PAGE 148.]
Mr. NEFF, from the Special Committee to whom was referred his Joint Resolution H. R. 1, [printed on page 111] and the Joint Resolution S. 1, [printed on page 107] returned the same with a recommendation that the latter be adopted.
Mr. NEFF then said: Mr. Speaker, I move that the resolution [see page 107] be adopted, and upon that I desire to submit a few remarks. I will promise the House that I will be very brief. As this is a question that necessary involves very grave considerations and one that will elicit, to a great extent, the attention not only of the people of the State of Indiana but of every other part of the country. I have felt desirous of being heard upon it here. The subject requires no extended argument, unless I should endeavor to go over the entire history of all the matters and things involved from the begining, and now pointing to the necessity of the adoption of this resolution. I am sorry to say that the public mind has been agitated to a greater extent than it naturally should have been. Still the fact cannot be disguised that there are apprehensions--aye serious apprehensions--in the minds of the people of the State in regard to this question, upon which the House is about to act. The adoption of this constitutional amedment I will, in my judgmsht, serve to put the public mind at rest. If we adopt this amendment to the Constitution, it is simply complying with the contract entered into between the creditors and the State a quarter of a century ago.
The people expect us to publish to the world by the highest and most solemn act known to the Legislature, that we will stand by our contract of settlement, and further to declare, by having it engrafted upon the organic law of the State that we will not pay the canal certificates, amounting to $17,000,000, and take back the canal. This question of taking back the canal and assuming the vast canal debt has agitated the people and entered largely into the political canvasses of 1870.
Notwithstanding Governor Baker recommended the passage of this constitutional amendment in his annual message in January 1869, and a majority of the House, of his own polities, sat here for one hundred and one days without ever offering a resolution, yet in the late canvass the opposition charged on every stump, and in the columns of every paper that if the Democrats secured the Legislature, we would take back the canal and saddle the State with the canal debt.
The people, however, disregarding their warnings, sent up a majority of Democrats. And in accordance with what I thought was right, and what I knew my constituents demanded, and to repel the base and unfounded calumny that was charged upon my party in the canvass, I was standing at my seat, and when the Speaker declared the House organized, the first time his name was called I offered this proposition, [see page 111] and feel assured that every Democrat on this floor will support it. I believe the opposition will support it also; but as they failed to pass an amendment when they had the Legislature two years ago, I wanted them to follow us in the measure.
It is true that under the provisions of the Coustitution we can make but slow progress in changing it. But it is well enough. Per- page: 449[View Page 449] haps it would have been well if the Great Charter of American Liberty had had the same guards thrown around it, and thereby prevented the reckless Constitutional tinkers from changing for partisan purposes the Constitution of our fathers. This proposition, if it is passed here, will be referred to the General Assembly which will meet two years hence. In the meantime the question will go to the people, and we will say to our constituents with regard to the agitation of this long ago adjusted matter, we have attempted to place it in such a condition that it may be forever settled by you. I say, Mr. Speaker, if we adopt this amendment we will be justified by the people. I speak not now as a party man. I speak for the people of Putnam county, when I say we ought to adopt the proposition for this constitutional amendment. Right here, on my table, I find a memorial from these old canal bondholders asking and importuning this Legislature to say by a public act that they may be allowed to sue the State, drag our sovereignty into the courts and prosecute their claims against her.
Mr. Speaker, I purpose for a few moments to call the attention of the House to the opinions and declarations of men of the highest authority in the State, speaking and acting contemporaneously with those acts of legislation by which the bondholders of the State effected a settlement. What was the understanding at that time by the State's creditors the people and those exercising their highest authority? I say, sir, that when we settled with this Canal company, we paid the utmost farthing of the old Internal Improvement debt. The members of the Legislatures of those years were met with censure when they went home, for having treated so liberally with the bondholders. It affords me pleasure, as the representative from Putnam, to allude to the Hon. Henry Secrest, now deceased, who bore so distinguished a part in effecting the adjustment of '46 and '47.
It was mainly through his influence; his eloquence, his consummate ability and untiring labors, that the settlement was made which relieved the State from her financial troubles, and gave her that prosperity of which we are all so justly proud. To satisfy the people he prepared and introduced the thirty-second section by way of amendment to the Butler bill, allowing the State at any time within twenty years thereafter, to take back the canal, and take up the certificates of stock issued to the company. The history of the case shows that when this settlement was made,it was considered that the canal and its effects were worth about nine millions of money. The State entered into this final agreement with her creditors. She agreed to surrender the Wabash and Erie Canal to the bondholders, and at the same time agreed to execute certificates of indebtedness to them for one-half the amount of the debt--then about thirteen millions of dollars That was the basis of settlement. The bondholders took the Wabash and Erie Canal, its property and its lands and franchises, for one-half the State's Internal Improvement debt, and the other half the State agreed to pay, and has paid it. She has therefore kept her faith.
There are papers connected with the settlement expressly stating that the canal and its interests then owned by the State, were worth at least nine millions, and the amount of the debt then assumed by the State was six and a quarter millions. Now, Mr. Speaker, can we in good faith adopt this joint resolution? Will we act in good faith to the bondholders? Will we violate any plighted faith? Will we wrong any individual? I take the position that we will not. And I take the contemporaneous testimony of public men, and the public documents of that time to show that this was a final settlement of the matter. I read an extract from Gov. Whitcomb's message, delivered to both Houses of the General Assembly on the 8th of December, 1846:
In relation to the proposed arrangement for the payment of the State debt, and the completion of the Wabash and Erie Canal, as authorized by the act which was passed at the last session of the Legislature, I have the satisfaction to state that a letter was received by me in the early part of July last, from Mr. Palmer of London, bearing date of the 13th day of May, 1846, enclosing a copy of two resolutions of that date, which had been adopted by the Committee of bondholders in London, under whose authority Mr. Charles Butler had acted in submitting propositions in their behalf, resulting in the passage of the bill in question. In these resolutions (which, with Mr. Palmer's letter, are herewith submitted) it will be seen that the opinion is expressed, that it will be for the interest of the bondholders to concur in the principle of that arrangement, by the payment of one-half of the principal and interest of the debt by taxation, and the other half by the property and tolls of the Canal, from tne State line adjoining Ohio to Evansville, such property to be assigned to three trustees, and the State to be freed from responsibility on that portion of the debt owed, and interest soon to be secured.
What else did the State give to these bondholders besides this Canal of more than three hundred miles in length? Why, Mr. Speaker, the State had a donation from Congress to this Canal of eight hundred thousand acres of land, which, to-day, at the appraisement is worth sixteen millions of money; and this immense interest was conveyed to the bondholders.
And yet they come here, under the pretense of good faith to the people, and say to us that we ought to allow them to prosecute the State of Indiana--allow them to bring their action in the courts of the State for claims that we have thus settled with them and paid them in good faith.
A few years previous to that time, all the sanguine friends of internal improvement looked forward to the time when we would be a page: 450[View Page 450] people without taxation. But they were deceived. I am not here to reflect on them for that. They were noble spirits--high-minded men. I am not here to stir the dust of those who have passed away.
I say this was the payment of the bondholders. They took all the Canal and half their bonds. And now they say that we have failed to keep our promise to them--in this: that we have suffered and permitted railroads--that we have incorporated railroad companies, who have built these roads all over the country. They claim that we should have left the Canal to them without competition, and because we have not done that therefore we have violated our faith! Now, here is what Governor Whitcomb said in his annual message to the General Assembly that met next after the passage of these acts of settlement:
But while the original bill gave the State the option of afterwards throwing one-half the principal also, upon the Canal for payment, by the supplemental bill, (and consequently by the law as it now stands,) that object is at once effected, by one-half of the surrendered debt both principal and interest, resting exclusively upon the Canal for payment, the State being released from all further responsibility in relation to it. The great and leading principle of the first bill, namely the satisfying of one-half of the surrendered debt from the Canal, remains unchanged, nor does the supplementary bill involve the State any further in debt. The main difference between the bills consists in the latter giving to the bondholders, who should finish the Canal, a priority in the payment of their claims and expenses of its construction out of the tolls and profits, over those who would not join in its construction.
This is the languague of no common man. I am proud of the thought no State ever had an abler, truer, or more zealous friend than James Whitcomb, the Jefferson of Indiana. By this extract you will see what party it was that came forward and subscribed the settlement, agreeing to finish the Wabash and Erie Canal to Evansville, for which it would require some two or three millions of money; and they agreed that those who should come forward and make this subscription should be first paid out of the proceeds of the Canal. But Gov. Whitcomb says further:
The final arrangement of our public debt can not fail to exercise a favorable influence upon the property, the morals, and the character of the State, and is the cause of heartfelt congratulations will all. We have suffered much through past improvidence; may we never neglect the lessons it has taught us.
And in the same message, and on the same page, he says:
If capitalists would not be justified in risking their means in the construction of a particular work or works, the State, now just emerging from insolvency, should not be required to do so. The level surface and fertile soil of Indiana, offer great inducements to the construction of railroads with a view to profit, and the most profitable because the most needed, will be first undertaken. When constructed by private or associated means there is less extravagance, and less danger of the faithlessness of agents than if they were constructed by the State.
I will now read an extract from the report of the Hon. Henry Secrest, from the select Joint Committee of the two Houses of the General Assembly, recommending the passage of the [Butler] bill of January 1846. He says in his report.
Taking then, this last proposition of the agent of the bondholders, with the modifications of the first proposition embodied in it, as the result of a compromise of opinion on his part, and of the settled opinion entertained on the other part, it may be regarded as forming the basis of an arrangement, and the undersigned has no hesitation in recommending it as such to the favorable consideration of the House.
This proposition is substantially to release the general revenues of the State and her public faith from one-half of the entire funded debt, and making the same a charge against the entire Erie, Wabash and Ohio canal, in Indiana. In effect, this is the same as taking one-half of the public debt from the shoulders of our tax-payers, and placing it upon this canal.
Mr. Secrest, of Putnam, who reported this bill, said it is, in effect, taking one-half of the public debt from the shoulders of our tax payers and placing it upon the canal. He says, further:
In addition, the bondholders are willing to take the canal and its lands, (not absolutely, but in trust;) and finish the work through to the Ohio River, advancing one-third or more of the cost of completion in cash, and using the lands for the balance so far as practicable; and taking their recourse for this advance, not against the State, but only against the lands and revenues of the canal; thus advancing money to the canal on the security of the Congress grants of lands, without imposing any further debt upon the State; but on the contrary, in effect, leaving our debt less by one-half than it now is.
Before I sit down I desire to call the attention of the House to a short extract from a report submitted by one of the resident trustees of this canal, who has been a trustee on the part of the bondholders for the last twenty years, as further proof of what was said and understood at the time of these proceedings. I allude to the Hon. Thomas Dowling, of Terre Haute, and I read from the State Sentinel of Feb. 5, 1846. He says:
- The bondholders agree to take the canal, its revenues and the lands donated by Congress for its construction, and discharge the State absolutely from one-half of the entire debt of the State or about six and a half millions of dollars.
- They pledge themselves to finish the canal from Coal Creek to Evansville in four years, and to make all needful side cuts and feeders, as provided in the several acts for the prosecution of the same.
Then, sir, I submit to the members of this House, has there been any bad faith on the part of the State of Indiana toward her bondholders? Did we not pay them as we agreed to do? I insist that all this has been done in fairness and honesty. It is notorious that this settlement with creditors was sought, was enacted at the request of the bondholders. They importuned the people for this arrange- page: 451[View Page 451] ment, and it was considered as more favorable to them than to the people of Indiana.
I will now close with a single remark: It has been charged all over this State that this Legislature would assume the payment of this old canceled debt. Let us refute this charge by submitting this question to the people, and let them decide it.
Mr. MILES. Mr. Speaker: I do not desire to amplify this discussion by any extended remarks. My only purpose in rising is simply to submit to the consideration of the House and the country, my honest convictions in relation to the speedy passage of the amendment to the Constitution of the State under consideration, which I deem of vital importance, as it affects very materially the entire population of this great and growing State. And being desirous that its progress may not be retarded by assuming inequitable and unjust pecuniary obligations, no personal considerations have impelled me, only the desire I hold in common with her citizens, to promote her honor and prosperity.
The assumption of sixteen million dollars is no trivial matter to the already tax-ridden people of the State. With all her embarrassments she has ever faithfully fulfilled her obligations at home and abroad, and has never allowed the language of "repudiation" to be written upon the face of her rising glory. In times gone by which were prolific with civil commotions, she sustained among her sister States an enviable reputation. Her sons have wedded their names to victory on every battlefield they drew the sword, and she shines to-day as a star of the first magnitude in her reliability for her contracts, her wisdom in counsel and valor in armor. Her renown is such as to excite pride and admiration in the hearts of her people, and they would not say one word that would tender in the least to tarnish her lustre.
The populace are looking with anxious yet hopeful solicitude to this General Assembly to pass an amendment to the Constitution of the State to be submitted to them, which will forever preclude further legislation upon this subject. I flatter myself I know the mind of the people, and will say if they are permitted to vote upon the amendment they will, in my judgment, bury the craven and unjust demands of the bondholders of the Wabash and Erie Canal so deep that the trump of the Archangel will never resurrect it. And any man or set of men that dare advocate, directly or indirectly, in any way, the assumption of the debt of said canal, or any part thereof not specified in the Butler bills, will be glad to hide his blushing face in obscurity ere five yeasr shall have dawned.
We owe this to the people who have been so generous and confiding as to send us here. They demand, and they have a right to demand, at our hands, being their public servants, relief from the anxiety that is everywhere manifested, and will continue till there is a final adjustment of this question by the contract in the funded acts of 1846-7, commonly known as the "Butler Bills."
When this matter was adjusted, the bonded debt of the State amounted to about fourteen million dollars,principal and interest. The State being embarrassed with this debt, they entered into this contract in order to place the financial condition of the State on a more healthy basis, which agreement was accepted in good faith by the State as a final adjustment of the then existing debt of the State, and was accepted by the bondholders, through Mr. Butler, their agent, who claimed to represent the bondholding interest, as a finality. By this agreement the old bonds were to be surrendered, and in lieu thereof the State was to issue new bonds to the amount of half her indebtedness, to be paid by the people by taxation. By this contract the other half of the old debt was paid by the transfer of the Wabash and Erie Canal and the land granted by Congress, eighty thousand acres, valued at that time at two million four hundred thousand dollars. And further, said bondholders were to finish said canal to Evansville by a specified time, and for the moneys so advanced and expended to complete the canal to Evansville, the lands so received, tolls and revenues, were their only security, and the faith of the State was in no wise further pledged.
Their only security, solely and exclusively was the said canal lands, and the tolls and revenues of said canal. (Acts of 1846, page 6, sec. 8, and sec. 32, p. 16, same act.) You will clearly perceive that these two sections contain the gist of the contract, which plainly demonstrates that the faith of the State is not pledged for their payment. And further, when they accepted this canal they took it subject to all then existing liens, and I cannot see why the State should be held liable, or how the holders of these old Internal Improvement bonds can come in with good grace at this time, after remaining as still as death for nearly twenty-five years and not even raising their voices when this contract was entered into.
It does seem to me that this great lapse of time should be considered, to a great extent as an acquiescence in the agreement of 1846-7; and, sir, this long delay of Mr. Garrett et al. by failing to institute proceedings long ago, shows beyond question, they consider themselves, to some extent, bound by the contract so made. Sir, I take the position that the State is not liable for the payment of these old Internal Improvement bonds held by Mr. Garrett et al., according to the contract, unless they be surrendered in compliance with the act of 1847, section eight. As you will perceive, if we made arrangements to pay those page: 452[View Page 452] outstanding bonds in full, we would go beyond the contract, and we have no right to assume any of them, or act at all in the matter till the contract with the State and the bondholders of the Wabash and Erie Canal is complied with.
This is a grave question, and we should be careful to act ou the defensive because it is safer for the people. Let us not act in haste. If the bonds held by Mr. Garrett and others are claims that we ought to take cognizance of, they certainly will not loose anything by waiting, and it certainly will be time enough for the State to pay these outstanding bonds held by Mr. Garrett et al., when the courts adjudge that the State is responsible for their payment, and not the bondholders of the Wabash and Erie Canal. I say then will be time enough for the State to make provisions for their payment. We are not acting here in a judicial capacity, but, sir, we are here to act as we believe to be for the best interest of the people, by enacting wholesome and just laws. If we err let us err on the side of the hard working yoemanry of the country, and leave to the courts the responsibility to decide as to the constitutionality of the act.
Under the contract between the State and her creditors I submit there is nothing in the funded act of 1846-7 that required the State to defend the sale of said canal against former liens or liabilities. But, sir, the creditors of the State, were advised as to the liens upon the canal, and accepted the canal subject to those liens. The holders of the Wabash and Erie Canal bonds assumed obligations embodied in the Butler bill in regard to those Internal Improvement bonds that were not surrendered, and the State is bound by the contract to make no payment of the Internal Improvement bonds that did not come in to the compromise, except as provided in the Butler bills. I am willing and ready to carry out these acts to the letter and spirit.
If they demand more, I, for one say to them, "Ne plus ultra." I am not willing to assume liabilities on behalf of the State that the contract does not specifically imply, or that will tend in any way to invalidate the agreement so as to place the creditors in "statu quo."
This, I claim, was a fair contract entered into by parties capable to contract in the fullest acceptation of the term, with a sufficient consideration. They being advised as to the liabilities, it is too late now for them to take advantage of their own wrong, (which is an established principle of law,) unless there be fraud shown; and in their long and laborious memorial to this General Assembly, they do not pretend to say there was anything of the kind. Let us pass this, and the people, "una voce" will send up shouts of joy, saying, "Well done, thou good and faithful servants." They will consider this act as the dawning of better days, that will tend to a great extent, to ease the standard of legislative bodies from the foul imputation of being bought and sold like sheep in the market. When these outstanding bonds are surrendered according to the contract, the State will be ready to meet her liabilities.
Mr. Speaker, this whole matter assimulates into this kind of a case. When an individual owes, say twelve men, each of whom have a mortgage lien upon his manufacturing establishment, and he fails to pay, and thereupon ten of the men say to him, if you will arrange for the payment of half of your liabilities in money, at a future day, we will take your manufacturing establishment for the other half. He accepts and transfers the establishment to them; of course they take it subject to the mortgage of the other two; for the whole debt due to these two, and surely no principle of equity would compel the debtor to ever pay more than one-half the sum so due to those two men. This is the view I take of the matter.
If even I feel conscious of being on the side of justice, I would not knowingly do anything to reflect upon the honor of the State. I have as much State pride as any member upon this floor, having breathed my first breath upon her soil, and I indulge the hope that her prosperity may continue to increase as time rolls on. My only desire is to know what is just and act accordingly. The surest status I can recommend to members upon this floor to govern their actions in this matter, in the language of Shakespeare, is--
- "Poise the cause in justice's equal scales,
- Whose beam stands sure, whose rightful cause prevails."
Mr. McDONALD. Mr. Speaker, I had not intended to say anything on this question, but as a distinguished man once said: "We are making history;" I must be allowed to say that we also are making history here, and we must be allowed to recur to its events. I shall ask but five minutes' time to give my opinion.
Sir, I shall vote for the adoption of this joint resolution, first because it is right and just. I am aware that some people say--and they have said--that the Democratic party in this State would propose--whenever they might come partially into power--to resume that old contract with a certain set of bondholders of the State, and thereby bring again upon the people of Indiana a debt which was paid long ago of many millions of dollars. But I do not esteem that any such question is involved in this matter. It is simply a question of right and wrong, and the single object is, to do right.
page: 453[View Page 453]I propose to vote for this joint resolution, and send it to the people, that they may know, by this public act, that we are true to their interests in this House. I care but little, sir, about any display of oratory that may be made on this floor. Let us come forward in right honest words and say that the men who have made this charge have lied against the Democratic party. I, sir, and you have heard it. It has been published in my section and in your section. It was charged in the campaign by the Indiana State Journal, and repeated by the lesser lights of the press in the same partisan interest all over the State, that if the Democratic party should come into power the State of Indiana would be sold out--would be saddled with that old debt of $16,000,000. Now, sir, is the time for it to be shown that we, as Democrats will act honestly to demonstrate the groundlessness of this charge by our spleeny traducers; and I for one, will hurl it back with indignation.
You will recollect, sir, that when our State convention met here last January, there was nothing said about this question. But just as soon as the convention dissolved and its members returned home, this charge was heralded by the State Journal, and that honest man and his advisers in the lower room of this building folded their arms and shut their mouths in regard to what that man did two years ago. But they came before the people and declared that the Democratic party were in favor of that immense swindle. Now, I propose to say by my vote here that this question shall go to the peoplethat my people and all the people of the State who are equally interested with ourselves may investigate it and act upon it. I propose to say by my uote here that the two millions of dollars intended to be expended upon this question can have no effect upon the Democratic party, and the honest portion of the Republican party in this General Assembly.
Why, sir, I have been told that we were to be bought; that there were two millions of dollars to buy us! And I will say this much only about this matter, that though I am a poor man, these bloated corruptionists have not got money enough to buy me. I will dig with my hands, and my wife and children shall dig and suffer beggary before it shall be said that these insidious bondholders of the State have purchased my vote here. Then let us pass this joint resolution, and let it be demonstrated to the world--not only to the people of Indiana, but to the people of the world, and especially to our traducers on every side, that we know the right and that we dare to do it. I very much regret to mention this matter here; but I have a perfect right to do so, and, while I say these things, I want every gentleman on the other side of the House to be asurred that I respect them as gentlemen and as members of this body. But I want them to come forward now and show their hands. I want them to say that they meant what they said in their convention of February, 1870--that they will not be constrained as that convention was--to say nothing of the act of their Governor in the year before.
Yes sir, we have been told that this immense debt is to be eventually saddled upon the people of Indiana. I only refer to this matter that it may be treated with the scorn and contempt which it deserves. But we have been told that eventually the politicians here would be brought up! Sir, I am not prepared to receive that doctrine but I am prepared to repudiate it.
I will say then, let us leave this question where it properly belongs--with the people; and if they say this amendment shall not be passed--shall not be adopted into the Constitution as the finality of a matter which has been deliberately and honestly settled--then Mr. Speaker, we shall not have failed in the preformance of our official duty as servants of the people. It is simply to throw the responsibility upon the shoulders of the people, to be settled by that silent monitor--the ballot. And if the people of the State shall second and sanction this solemn act of their representatives, then let those men who have corruptly assailed them, go into the courts with their claims and we propose to follow them.
And I will say here in my place, as a member of the House of Representatives, that I will vote the necessary means to Governor Baker to follow them into any court where they may see proper to submit their claims. And they may send out as many marked copies of their briefs and memorials as they choose; but let them be assured that we will "meet them again at Philippi". Having adopted this proposition, Mr. Speaker we can retire in the consciousness that we have done what we conceive to be right; and if we have erred, it is not an error of the spirit. Let us pass this resolution, and show the people that we trust them, and say to them with an honest and open face, we have done the best we could.
The resolution was adopted nem con.
