Messrs. William L. Bull, Charles D. Dickey, Jr., Hugh R. Garden and Mr. Dumont, with Mr. G. S. Ellis, Secretary, representing the Bondholders' Committee, appeared before the Commission. On motion, the Commission consented that Colonel W. W. Gordon should attend the sessions of the Joint Committees, as the counsel for the Bondholders' Committee. Mr. Hugh R. Garden, for the Bondholders' Committee, then proceeded, to make a statement outlining the formation of the Bondholders' Committee, and the depositing of the bonds, stating that the committee controlled $23,000,000 of outstanding obligations of the State. Mr. William L. Bull, of the same Committee, also made a statement upon the same subject. Whereupon, the following communication, dated New York, June 2, 1891, was presented to the Commission by the Bondholders' Committee, and read by the secretary: NEW YORK, JUNE 2, 1891. To the Hon. PHILIP W. MCKINNEY, TAYLOR BERRY, J. HOGE Tyler, R. H. CARDWELL, H. T. WICKHAM, W. D. DABNEY, R. H. TYLER, GENTLEMEN OF THE COMMISSION: Virginia Commission: In response to a joint resolution adopted by the General Assembly of Virginia on the 3d day of March, 1890, this Committee was organized for the purpose of submitting to you a plan and proposition for the settlement of the entire debt of Virginia in accordance with the terms of said joint resolution. This Committee has associated with it an Advisory Board for the creditors, composed of gentlemen whose names and reputation are a guarantee of intelligent and impartial consideration. The function and duties of this Committee are set forth in a certain agreement entered into with the creditors of Virginia dated May 12, 1890, and respectfully submitted as a part hereof; and the function of the Advisory Board is set forth in the plan and proposition for the adjustment of the debt of Virginia dated November 28, 1890, which has been duly approved by said Advisory Board, and also submitted as a part hereof. The Committee selected depositaries entitled to the highest confidence and commanding the largest financial influence in their several localities. The utmost diligence has been exercised to obtain a deposit of the outstanding debt of the State for the purpose of said settlement, and by publication, advertisement, individual and official correspondence, no effort has been spared by the Committee or by the depositaries. The result is an acquiescence on the part of the Bondholders absolutely unprecedented, and hitherto deemed impossible. Repeated efforts have been heretofore made to secure a deposit of the bonds, all of which have failed, and every settlement hitherto attempted has been unsuccessful. The Committee has now under its control, and is prepared to surrender to the State, upon the conclusion of a settlement, not less than twenty-three millions of dollars of the defaulted obligations of the State owned by the public. The Committee recognizes the principles of the Riddleberger act of 1882 to be "a true state of the account between the State and her creditors," eliminating all compound interest, but it is of the opinion that the statement of the account, as set forth in the act, is erroneous in several par ticulars, and respectfully submits that, while adhering to the principles of the said act of February 14, 1882, the State on one hand or the creditors on the other, will; gladly correct any errors in said account. Attention is called to the following facts by way of illustration: First. The title of the act is "To ascertain and declare Virginia's equitable share of the debt created before and actually existing at the time of the partition of her territory and resources," but the statement credits Virginia as against creditors who received nothing, with payments to others of principal and of interest in excess of her equitable share of such debt. It is respect fully submitted that there should be eliminated as a credit, all principal and interest paid by the State upon that portion of the debt set apart and declared to be the equitable proportion to be paid by the State of West Virginia, the same constituting, in the opinion of this Committee, a claim by the State of Virginia against the State of West Virginia, and not against the creditors of Virginia. Second. The Riddleberger bill provides for the scaling and exchange of the bonds held by the Literary Fund, and the amount of the debt January 1, 1861, as shown by the statement (part of the Riddleberger bill), was designed to include the Literary Fund, but as a matter of fact it was inadvertently omitted, and therefore increases the debt by that amount as of January 1, 1861. Third. In the statement forming part of the Riddleberger bill, tax-receivable coupons outstanding October 1, 1881, and those maturing January and July, 1882, were deducted from the arrearages of interest due by the State to the creditors upon the ground that they would be paid in accordance with the terms of the bill, and therefore increases the debt by that amount as of the 1st day of July, 1882. Fourth. The bonds of the State held by her institutions are included in all statements of the debt and are embraced in the act of February 14th, 1882. Nevertheless, full interest has always been paid on the original amount held by the State institutions including interest on the amount set apart as due by the State of West Virginia. It is respectfully submitted that these bonds should have been excluded from any statement of the public debt, and the full interest paid thereon treated as an ordinary expense of government; or if included, then the excess of interest paid thereon should not have been credited in favor of the State and charged against her creditors generally. It thus appears that the true state of the account between the State and her creditors, as contemplated by the Riddleberger bill, will present, as of July 1st, 1882, a much larger balance than is shown in said statement, and will aggregate at this date a larger amount than this Committee, for the purpose of being well within the principles of the Riddleberger bill, now asks of the State as a basis for the settlement of the whole debt owned by the public. The Riddleberger legislation provided for an interest charged at the rate of three per cent. per annum upon the net balance as per statement on the face of the bill, and in addition thereto, interest at three per cent. per annum on the Literary Fund with interest thereon from January 1, 1861. Interest at three per cent. per annum on matured coupons and other interest on bonds (which might not be promptly funded) as of the date of funding. These several items alone would aggregate not less than $825,000 per annum not including the unmatured coupons which might be funded, and not including the correction of certain errors heretofore referred to. It thus appears that the principles of the Riddleberger legislation calls for an interest charge of over $825,000 per annum, as of July 1, 1882, and the fundable interest which has been maturing since that date has materially increased this interest charge. It is proper to add that the valuation of property in the State has increased about $91,000,000 from 1882 to 1891. Of the debt proposed to be funded there is now outstanding, owned by the public, an apparent maximum, as of July 1, 1891, approximating $28,000,000. Of this amount the Bondholders' Committee control $23,000,000, principal and interest, to said date; and the Committee hereby proposes to surrender the same, together with any additional obligations which may be deposited, on the basis of $20,000,000 of new three per cent. bonds for the entire $28,000,000. The characteristics of the bond, under the terms of this proposition, to be, that the coupons shall be free from the tax-receivable feature; that the new obligations to be free from present and future taxation; that all fiduciaries may be authorized by law to invest in them, and that they may have such other characteristics and security as the representatives of the State and of the Committee may consider best calculated to give them the highest possible standing in the money markets of the world. It is proposed, as a part of this settlement, that the judgments and pending suits between the State of Virginia and her tax-payers who have tendered coupons in payment of taxes be adjusted and marked satisfied. FREDERIC P. OLCOTT, HENRY BUDGE, WILLIAM L. BULL, CHAS. D. DICKEY, JR., HUGH R. GARDEN, JOHN GILL, Bondholders' Committee. By G. S. ELLIS, Secretary. This Agreement, between Frederic P. Olcott, Charles D. Dickey, Jr., William L. Bull, Hugh R. Garden, Henry Budge, of New York, and John Gill, of Baltimore, and their successors, duly appointed to act in this behalf, and hereafter styled the Bondholders' Committee, parties of the first part, and such creditors of Virginia as shall deposit their obligations hereunder with either depositary hereinafter named, parties of the second part: WHEREAS, On March 5, 1890, the State of Virginia created a Commission to agree on terms for funding its debt; and WHEREAS, Said Commission cannot entertain any proposition unless accompanied by a guarantee that such proposition, if accepted by the State, will be carried out by the creditors; and WHEREAS, The said Bondholders' Committee has undertaken to bring about a settlement of said debt; and WHEREAS, Central Trust Company of New York, Brown, Shipley & Company, of London, The Mercantile Trust and Deposit Company of Baltimore, The Planters' National Bank of Richmond, have been appointed depositaries in this behalf: Witnesseth: FIRST.-The following gentlemen have consented to act as an Advisory Board for the creditors in this behalf, to-wit: Grover Cleveland, Thomas F. Bayard, Edward J. Phelps, George S. Coe, George G. Williams. The duty and function of said Advisory Board is to examine such plans or propositions of adjustment as may be formulated and proposed by the Bondholders' Committee representing the holders of the obligations of Virginia, as shall be submitted to it in accordance with the terms of this agreement, and to state its approval and recommendation, or the contrary. Its approval and recommendation of any plan shall be unanimous and in writing. Vacancies in the Advisory Board shall be filled by the remaining members. 1st. To bring about a deposit of said obligations of Virginia under this agreement, so far as possible. 2d. To formulate a plan of settlement, and after same has been approved by the Advisory Board, cause the same to be submitted to the creditors and Virginia for their acceptance, as herein provided. 3d. To act as the agent of the depositing creditors in carrying out the purposes of this agree ment. And power is hereby given to said Committee to contract with any individual, syndicate, or corporation in relation hereto, and generally to do and perform any act necessary or proper to accomplish said purposes and add to its number. The members of the Committee shall not be personally liable in any case for the acts of each other, nor for their own acts, except in cases of wilful malfeasance, nor shall they become personally liable for the acts of their agents or employees. The action of a majority of said Bondholders' Committee shall constitute the action of the whole and may be expressed by vote or in writing. Vacancies in the Bondholders' Committee shall be filled by the remaining members. THIRD-Either depositary herein named receiving on deposit hereunder any evidence of said debt shall issue therefor its certificate of deposit. The certificates for consol and ten-forty coupon bonds shall be negotiable and uniform in character, and those issued by depositaries in America, shall be engraved in accordance with the requirements of the New York Stock Exchange. The certificates shall be issued in such form as the Bondholders' Committee shall approve. FOURTH.-Subject to the restrictions herein mentioned, the Bondholders' Committee shall have full power to perform any act necessary or proper to bring about a settlement of the respective claims of the depositors against Virginia as represented by the obligations deposited. Provided, that no settlement can be concluded until it has been previously unanimously approved and recommended by the Advisory Board, and has also been submitted to the creditors, and accepted as follows, to wit: 1. As soon as a plan of settlement has been approved and recommended by the Advisory Board, the Bondholders' Committee, before proposing such settlement to Virginia, shall advertise for at least 20 days in one or more of the newspapers published in the cities of London, New York, Raitimore, and Richmond, that a settlement found practicable has been formulated, and notifying parties in interest where copies of such proposed settlement can be obtained in said cities withert cost. Copies of such proposed settlement shall also be furnished by the Bondholders' Committee the depositaries for distribution to creditors applying for the same. 2. If, within 60 days after the first publication of said advertisement, certificate holders amonis! ing to a majority of the face value of any class of the obligations deposited, notify in writing the Bondholders' Committee, either directly or through any depositary, of their unwillingness to accept the settlement proposed, then such proposed settlement shall not be consummated as to such class. If the Bondholders' Committee is not so notified, then it shall be assumed that said proposed settlement is satisfactory to and is accepted by a majority of, and is binding upon, all the depositing creditors of the class accepting, and it shall be forthwith submitted to Virginia to be consummated. 3. If, for any reason, the Bondholders' Committee deems it necessary to submit a modified plan, the right is reserved to it to do so in the manner as above provided. FIFTH.-After a plan of settlement has become effective (of which fact the declaration in writing of the Bondholders' Committee to the several depositaries shall be conclusive) each depositary shall, in such manner as shall be designated by the Bondholders' Committee, urren ler to Virginia the obligations of the class accepting as aforesaid, deposited with it, and shall receive in satisfaction thereof the bonds and other securities called for by said settlement which in form shall be satisfactory to the said Committee. The bonds and other securities so received from Virginia shall be immediately delivered by each depositary to the holders of its certificates, upon surrender of the same, in accordance with the terms of settlement. The Bondholders' Committee shall arrange for the purchase or sale of such fractional interests as may be necessary to equalize the distribution. SIXTH.-In full payment of all charges for services or expenses of every character on account of this undertaking, each depositor shall, when he exchanges his trust certificate for the new securities, pay to the depositary, for account of the Bondholders' Committee, three and one-half (31⁄2) per centum in cash, of the par value of such new securities obtained from Virginia in settlement. SEVENTH.-Any depositary whenever directed by the Bondholders' Committee, may surrender any obligation deposited under this agreement to the holder of its corresponding certificate. Any obligation may be withdrawn from a depositary at any time after December 31, 1891, unless the depositing creditors have accepted a proposed settlement, or unless a proposed settlement is pending for their acceptance; provided the corresponding certificate is surrendered, and provided, also, the holder pays the depositary, as his share of disbursements in having the debt deposited, a sum not exceeding one-fourth of one per centum of the par value (exclusive of any forfeited interest) of the obligation so withdrawn. EIGHTH.-Any obligation shall, upon the request of the certificate holder, and at his expense, be transferred from one depositary to another depositary acting under this agreement. NINTI.-Full power is hereby invested in the Bondholders' Committee to perform any act necessary or proper for the surrender by the depositaries, to the State of Virginia, of all or any obligation deposited in pursuance of a settlement which has been approved by the Advisory Board, and accepted by any class or all of the creditors as aforesaid. TENTH.-For the purposes of this agreement the debt is considered as divided into four classes, to-wit: First-class, "Old Bonds," to include all securities issued under acts passed previous to the Funding bill of 1871, "Pealers," to include all securities issued under the act of March 30, 1871, as amended by the act of March 7, 1872. Second-class, "Consols," to include all securities issued under act of March 30, 1871, with July, 1890, and subsequent coupons attached. Third-class, "Ten Forties," to include all securities issued under the act of March 28, 1879, with July, 1890, and subsequent coupons attached. Fourth-class, Tax receivable coupons prior to July, 1890. In Testimony Whereof, The Bondholders' Committee have affixed their signatures hereto, duly attested, this 12th day of May, 1890. FREDERIC P. OLCOTT, CHARLES D. DICKEY, JR., HUGH R. GARDEN, HENRY BUDGF, JOHN GILL. Bondholders' Committee. PLAN AND PROPOSITION FOR THE ADJUSTMENT OF THE DEBT OF VIRGINIA. NEW YORK, NOVEMBER 28, 1890. Hon. GROVER CLEVELAND, Hon. THOMAS F. BAYARD, Hon. EDWARD J. PHELPS, MR. GEORGE S. COE, MR. GEORGE G. WILLIAMS, Advisory Board for the Creditors of Virgina: The undersigned, Bondholders' Committee, beg to inform you that they have brought about a deposit of the obligations of Virginia as required by article "second" of the agreement dated May 12, 1890, between the committee and such creditors of Virginia as should deposit their obligations thereunder. A history of the bonds has been published by the committee, and was, with a copy of the agree ment, placed in your hands at the time you accepted the function of an Advisory Board. It is, therefore, unnecessary to restate the various attempts during the past twenty-five years to reorganize this debt, and which have resulted in the issue of the several classes of bonds. We call your attention to article "first" of said agreement, which is substantially the language used in your letter of acceptance, viz: "The duty and function of said Advisory Board is to examine such plans or propositions of adjustment, as may be formulated and proposed by the Bondholders' Committee representing the holders of the obligations of Virginia, which shall be submitted to it in accordance with the terms of this agreement, and to state its approval and recommendation or the contrary." We also call your attention to article "fourth" wherein it is "provided, that no settlement can be concluded until it has been previously unanimously approved and recommended by the Advisory Board, and has also been submitted to the creditors, and accepted." The duties of this committee, under the agreement, are: 1. To bring about a deposit of the obligations of Virginia, so far as possible. 2. To formulate a plan of settlement. 3. To submit such plan to the Advisory Board for its approval and recommendation. 4. To submit such plan, so recommended, to the depositing creditors for their acceptance. 5. To submit such plan, when accepted by the creditors, to Virginia for acceptance. 6. To surrender to Virginia the deposited obligations in exchange for the amount to be received for them. 7. To distribute the proceeds among the depositing creditors. The committee has performed the first and second duties. THE AMOUNT TO BE DEMANDED AND THE FORM OF PAYMENT. The State is a sovereign power. This committee represents the creditors of Virginia, and is in possession of substantially all of its bonds owned by the public. On the fifth day of March, 1890, the State of Virginia appointed a Commission: 1. To receive proposals for funding the whole debt of Virginia upon the principles set out in the act of February 14th, 1882: provided, however, that no proposal shall be entertained, which is not supported by a deposit in cash of not less than one million dollars, in such depositary as said Commission may designate, to insure the faithful performance of the proposal, if accepted and ratified, as hereinafter set forth. 2. To agree, subject to ratification by the General Assembly of Virginia, upon the terms of a contract with any parties offering a proposal to fund the entire debt of Virginia upon the conditions aforesaid: provided, however, that no proposal shall be entertained which departs from the act of February 14, 1882, save and except that said proposal may provide another plan for a sinking fund, not less favorable to the State than the present, or a lower rate of interest, or a longer period for the maturing of the principal, and that it be expressly declared that the principal of the debt held by the schools and colleges of Virginia at present shall not be affected, but that said bonds so held shall, if sold or transferred by said schools or colleges, be in all respects subject to said act of February 14, 1882. The powers of the Commission are restricted to a settlement upon the principles of the act of |