The regular Democratic convention nominated John V. Wright for governor, and the low tax convention nominated S. F. Wilson. These two divided the Democratic votes, Wright securing about 20,000 more than Wilson, and the Republican candidate, Alvin Hawkins, was elected upon a platform opposing repudiation.

On the 6th of April, 1881, the Legislature, a majority of its members being Democrats, passed an Act for the settlement of the State debt, except the bonds held by educational and charitable institutions, and those issued for the permanent school fund, dollar for dollar, with three per cent interest, the coupons to be receivable for taxes.20

Within two weeks after the approval of the Act by Governor Hawkins, it was attacked in the courts, and was held by a divided Supreme Court to be unconstitutional, in that it attempted to devote, irrevocably, a part of the State's future revenues to a specified purpose for many years, precluding any change in this respect by subsequent Legislatures.21

At the third extra session of the same Legislature was passed another Act settling the debt at sixty cents on the dollar, with a graded rate of interest, three per cent for two years, four per cent for two

20 Acts of Tennessee, 1881, First Session, chapter CLXXIII.

21 Lynn v. Polk, 8 Lea's Tennessee Reports, pages 121 and 328.

years, five per cent for two years, and six per cent after that, but this settlement was not accepted by the bondholders, and, as we shall see, did not end the matter.

As the time for the Democratic convention of 1882 drew near it became apparent that leaders of both factions were making strenuous efforts to restore harmony in that party. Harmony was attained, but the low tax men dictated the terms. They were thoroughly organized and splendidly led. A platform was adopted declaring for the funding of the railroad debt at fifty cents on the dollar, and three per cent interest; for funding dollar for dollar at six per cent interest, all bonds held by literary, charitable, and educational institutions, and for funding the State debt proper on the same basis, at the usual rates of interest, after eliminating the war interest. W. B. Bate was nominated for Governor and was elected. The more persistent State credit men, who came to be known as the "sky blues," left the convention, and adopted a platform reaffirming the State credit platform of 1880, and approving the settlement proposed by the extra session of the last Legislature. Joseph H. Fussell was nominated for Governor, but received only 4,814 votes.

The Legislature of 1883 finally settled the debt systematically upon the plan set out in the Democratic platform of the preceding year, and thus a most vex

ing and dangerous question passed out of the politics of the State.22

At that time the debt, principal and interest, was estimated to be $28,786,066.19; the amount to be funded at fifty cents on the dollar was $26,783,150.00, so that the total debt as established by the Act of 1883, was $15,784,608.19.23

Soon afterward this amount was increased nearly $1,000,000.00 when it was decided that the new issue notes of the bank of Tennessee must be paid by the State.

The bonds issued in 1883 run for thirty years, but have been redeemable at the option of the state since July 1, 1888.

In 1859, the bonded indebtedness of the State was over sixteen and a half millions; in December, 1902, it was a little over sixteen millions. In 1869, it reached thirty-seven millions. In 1859 and in 1869 the State was only secondarily liable for the greater part of the bonds, and at the first of these dates the principal debtors were solvent, and as a rule prosperous, but the course of events, as we have seen, has been such that the property of many of the principals was exhausted, and the debt for which the State is now absolutely and solely liable, is almost as large as its secondary liability of 1859.24

The Comptroller's reports show that in December,

22 Acts of Tennessee, 1883, chapter LXXXIV.

23 Message of Governor Bate, January 12, 1885. 24Comptroller's Report, 1904, page 18.

1898, the bonded debt was $17,351,866.66, and in December, 1902, $16,021,466.66, a reduction in four years of $1,330,400.00, under the administration of Benton McMillin as Governor, Theo. F. King, as Comptroller, and Edward B. Craig as Treasurer. Under succeeding administrations additional reductions have been made, and there is good reason to hope that Tennessee will enter the second quarter of the twentieth century free from the burden of debt, under which she will then have labored for sixty years.

It becomes the writer, a State credit Democrat, whose opinions have undergone no change, to ascribe to those to whom he was opposed the same sincerity and patriotism which he believes to have animated those with whom he agreed. No one will deny that the equities and the legal defenses of the State against the bondholders were many and strong, and that it was only just that the debt should be reduced materially. The proposition made to Governor Porter to accept fifty cents on the dollar, was made by the bondholders in view of the evident financial distress and inability of the State, and also of the legal and moral infirmities of the bonds, and may be held to show that the final settlement was not very far from their own conception of what was just in the premises. The 50-4 proposition of 1879 was generally acceptable to the State credit men, as was also the Act for settling at sixty cents of the dollar. Thus, while it is

true that the bondholders were not consulted, nevertheless, the adjustment was made upon a basis which did not vary greatly from what they may fairly be said to have approved, and in any event, the motives of the people of Tennessee cannot be justly impeached. That they were honest in purpose, and sincere in their belief, may be asserted most positively.

The argument against the bonds has not been set out in full, but enough has been said to show that the basis of settlement was in substantial accord with the opinions of the bondholders as indicated by them more than once, and that criticism of the State is directed to the method pursued rather than to the result reached. If the transaction had been between individuals, a court of equity, with the facts before it, and unaffected by technical estoppels, certainly would have relieved the State of a very large part of the debt, not less probably than the amount eliminated by the Legislature.

The Constitution of 1870 retains that clause of the Constitution of 1834, which declared that the Legislature should encourage internal improvements,25 but elsewhere it provides that the credit of the State shall not be loaned or given hereafter to any "person, association, company, corporation, or municipality," and that the State shall not become the owner in whole or in part of any bank, or a stockholder with others in any association, company, corporation, or municipality.20

25Constitution of 1870, Article X, section 11.

26Constitution of 1870, Article II, section 31.