WEST VIRGINIA STATE DEBT.
The following article is a chapter taken from “The History of the Formation of the State of West Virginia. Why Formed and How?” by W. S. Laidley, Esq., of Charleston, W. Va. The said history has not yet been published, but is prepared and ready for the press. The article is a defense to the claim that West Virginia is bound for a part of the public debt of Virginia, and the subject is one of interest not only to the historian, but also to the lawyer, and especially to the Legislature of West Virginia. We have no doubt but that it will evoke some criticism and replies from some of the Virginia politicians, and more probably from some lawyers, in the interest of the syndicate holding West Virginia certificates.
CHAPTER XXVI.
PUBLIC OR STATE DEBT.
The State of West Virginia has contracted, no debt, and by the provision of the Constitution adopted when she was formed, and which is now a part of the present Constitution, she can contract no debt. It is intended that she shall run on a cash basis, and pay as she goes. It is however claimed, that this State owes a part of the debt of the State of Virginia, that her territory was part of Virginia, and that this territory must bear its portion of the debt that existed at the date of the separation, and that the area of West Virginia is about the one-third of what Virginia was, so her liability is for the one-third of the said debt.
Why the territory should be taken as the measure of liability, rather than the population, the people who made the debt and composed the State, is not very clear.
It is, however, clear, that if West Virginia has any debt, it is one that she had nothing to do with the making, and one for which she received no benefits.
The State of Virginia has settled down on the proposition that West Virginia must pay the one-third of her debt that existed January 1, 1861, which was $31,778,867.32.
There are others, however, that claim that the portion of the debt that the new State should pay, is fixed by the Ordinance of the Convention of West Virginia of August 20th, 1861, at Wheeling, which provided that the new State should take upon itself a just proportion of the said debt of Virginia, and the mode of ascertaining this proportion was then set forth, and it only remains to make the statement thereby required, to determine the amount thereof.
Then there are others, who claim that the amount of the said new State debt, can only be determined by the provisions of the Constitution of the new State, when said State was organized, with the consent of Virginia and of Congress, and admitted into the national Union as one of the United States of America.
Then there are others that claim that West Virginia owes no part of the Virginia debt whatever, either at law or in equity.
Let us examine all of these claims, and see, if we can, determine which is the best supported by authority, law and equity.
VIRGINIA’S CLAIM.
The people of Virginia may be able to consider the validity of others rights, privileges and powers, but when they come to deal with the people residing west of the Allegheny, most of whom came from another part of Virginia, east of said mountains, they seem to have no regard for the rights of the West Virginian and that they have none, which the Eastern Virginian is bound to respect, and they seem to think that by an inheritance they have the right to direct and control, without consulting the western man in regard to his rights and privileges and duties.
The Court of Appeals of Virginia, in the case of Higginbotham against The Commonwealth, 25 Grattan 627, decides that the State of West Virginia is bound for the whole debt of Virginia, to the same extent that Virginia is bound, and in the opinion, the Judge indulges in considerable extravagance to show his admiration for the old State and his contempt for the new one. And in another decision, reported in 81 Virginia Reports, 343, after speaking of the validity of the bonds and coupons given by Virginia, for the two thirds of her debt, says: “If West Virginia is faithful to her obligations resting upon her, the creditors will receive the other third also.” We suppose that he means by “her obligations, resting upon her,” the obligations imposed by the State of Virginia, when the said Virginia set apart the one-third of her debt and issued certificates therefor, which she said was the part that West Virginia was to pay and which have since been denominated “West Virginia Certificates.”
It may be that the people of Virginia take to themselves great credit for extreme liberality in letting us off with paying the one-third only of her said debt, instead of requiring us to pay it all. If the debt so set apart is due to Virginia, and we did owe to her the whole of the said debt, and she let us off with the payment of the one-third of what we owed to her, then we would feel that she had been very liberal towards us, and our gratitude would have been manifested in every conceivable manner. But it appears that Virginia owed the bonds, and she took up the old bonds, with new ones, for the two-thirds thereof, and gave the certificates, that West Virginia would pay the rest, and we fail to see where the authority comes from, to make the State of West Virginia liable for anything, and hence our sense of gratitude may not be excited to the extent that might be expected of us. But the State of Virginia seems to have settled down upon the proposition, that West Virginia must pay the one-third of her debt, which is represented by the said “West Virginia Certificates,” and the Hon. Jas. M. Mason, of Jefferson county, says, “that it is easier to establish the Mohammedon religion in Virginia, than to pass a law that would require her to pay any part of the said one-third which has been set apart for West Virginia to pay.”
We are not informed whether this is an “authorized version” of the situation, but we take it, that this is about correct.
The next question is, whether the claim, that West Virginia is bound by the Ordinance of Virginia of August 20, 1861, and that this is the proper measure for the liability of West Virginia?
This Ordinance was adopted by the Convention of the people of Virginia, assembled at Wheeling, before there was any new State in existence, and before the name of said new State had been determined, but there were indications, “coming events cast their shadows before,” which created expectations, and if there was no bad luck, there would be one to name, and the Convention said, this expected new State should take upon itself a just proportion of the Virginia debt, and then prescribed the mode of ascertaining this part. No other power or authority had anything to do with this decision of the Virginia Convention, but when the new State came into existence, and was named “West Virginia,” and it made, or had made for it, a constitution, and the provisions of the said constitution was adopted November 26, 1861, it disregarded the Ordinance of the Virginia Convention and instead thereof, provided that the Legislature of West Virginia should ascertain the equitable part of the Virginia debt that the new State should assume and pay.
After the said constitution had been made and adopted, the State of Virginia, by its Legislature, “gave its consent to the formation of the new State of West Virginia.” by an act passed the 13th day of May, 1862, “out of the counties (naming them), according to the boundaries and under the provisions set forth in the Constitution of the said State of West Virginia and the schedule thereto annexed, proposed by the Constitution which assembled at Wheeling on the 26 November, 1861.”
That with the said provision in the Constitution. Congress afterwards admitted the State into the Union.
Here we have a provision in the Constitution for the new State, different from that in the Ordinance of Virginia, and the consent of Virginia and Congress, to said State, to be a State in the United States, and this provision is the only provision, when all three of the said powers had consented to, and it would seem that if there was any compact, in relation to the subject of the State debt, this would be the one.
While Virginia had said that the debt should be ascertained in a certain manner, and West Virginia had said it should be ascertained by another manner, and Virginia consented to the formation of the new State with this Constitution, she can not insist on the provisions of the Ordinance, but is bound by her consent to the provisions in the Constitution of West Virginia, which is that the Legislature of West Virginia shall ascertain the equitable proportion to be assumed by West Virginia. That the subject is placed under the jurisdiction of the Legislature of West Virginia and this only can determine it.
That Virginia can not have a judicial ascertainment of a proportion, to which she has assented, shall be done by a legislature, it there is any such thing as estopped, this will certainly estop her from any other course.
After the new State had been formed, the Legislature of Virginia appointed Commissioners to treat with like Commissioners to be appointed by West Virginia, but it has been said that it was “an open secret” that the Virginia Commissioners would adjust upon the terms of West Virginia assuming the one-third of the said debt and upon no other terms whatever, and that this was known to the Governor and Legislature before the said Commissioners were appointed. West Virginia also appointed Commissioners, one set under the Act of 1871, and another under the Act of 1873.
When the first Commissioners from West Virginia reached Richmond, and stated their mission, they were received very politely as men, but were not recognized as representatives from West Virginia, as this State had not yet been fully recognized as a fact, at that State, at Richmond.
No action was ever taken by the said Commissioners jointly.
The Commission of 1871 reported the part to be paid, under the Ordinance plan, would be $953,360, and the 1873 Commission made the sum $525,000, while the Virginia plan made the West Virginia part $10,592,955.77, which on the first day of January, 1901, with forty years interest added, would make the debt 836,201,961.12. This would take, for interest and a payment of one million per year, for sinking fund, an annual sum to be raised of $3,162,177.66 by taxation.
We feel confident in asserting that the Virginia claim of one-third, has nothing to sustain it, but the Virginia assertion of it, that the plan of ascertaining the amount under the Ordinance is not binding on West Virginia, for it is only an assertion of Virginia, and which she subsequently abandoned.
Virginia will claim we owe her one-third of the debt or nothing, and she refuses to recognize any Act or Ordinance passed at Wheeling in her name, and does not recognize the consent given by her Legislature, done at Wheeling in May, 1862, and West Virginia does not recognize the binding effect of an assertion made by Virginia, anywhere: that we owe her anything. But that the Legislature of West Virginia alone has the right to determine the question of amount she should assume. What has West Virginia decided?
In the year 1872, the people of West Virginia, assembled in convention, and took into consideration the amendment of the Constitution of West Virginia. During the progress of the said Convention, the clause in the first Constitution which recognized an obligation on West Virginia to assume and pay an equitable part of said debt, was under consideration, and when all the facts and figures had been collected together. Mr. Woods offered the following resolution, which was referred to the committee which had in charge the subject of Taxation. Finances, etc.:
“Resolved. That there exists no just, legal, or equitable claim against the State of West Virginia, for the payment of any portion of the public debt of Virginia, and that the existing provision on that subject, in our present Constitution, ought no longer to exist.”
When the said committee reported the article for the new Constitution on this subject, the clause which was in the first Constitution referred to, was omitted.
That it was purposely and not accidently omitted is shown by the Journal of the Convention, see pages 202-203, where it will appear that Mr. Willey moved to amend the said report, by adding the following additional section, viz:
“An equitable proportion of the public debt of the Commonwealth of Virginia, prior to January 1. 1861, shall be assumed by this State, and the Legislature shall ascertain the same as soon as practicable and provide for the payment thereof.”
Upon which motion the vote by “Ayes” and “Nays: were ordered and taken, and Mr. Willey ‘s motion was lost.
By this action of the Convention, Mr. Woods’ resolution was adopted, the Convention adopted the Constitution omitting the clause which Mr. Woods said should no longer exist. And the people of West Virginia, adopted the said Constitution. Thus the people of West Virginia adopted the resolution of Mr. Woods, that there was no just, legal or equitable claim against West Virginia for the payment of any part of the public debt of Virginia, etc.
We here give the names of the voters on Mr. Willey’s motion:
The ayes were: Messrs. Armstrong, Atkinson, Brown. Dickinson, Farnsworth, Fitzhugh, Hagans, Kantner, Mathews, Miller, McCreery, Pearce, Pendleton, Pipes, Pugh, Robinson, Smith, Wheat, Willey, and Mr. President (Gov. Sam’l Price) – 20.
The noes were: Messrs. Arnett, Bassell, Bee, Boggs, Byrne, Calfee, Crim, Cushing, Davenport, Faulkner, Ferguson, Ferrell, Raymond, Hall, Haynes, Hoge, Hollt, Jackson of Wood, Jackson of Lewis, Johnson of Wood, Johnson of Tyler, Knight, Leonard, Lurty, Martin, Mofrett, Monroe, Morgan, McCleary, Osborn, Parrell, Park, Pate, Prince, Randolph, Roberts, Snider, Strickler, Stump, Thornburg, Thompson. Travers, Waggener, Warth, Wilson and Woods – 46.
But it may be said that this action of the Convention and the people is not a compliance with the requirements of the Constitution that says “the Legislature shall ascertain the amount, etc.”
Strictly, it may not be, but if the representatives of the people, in the Legislature can do it, why cannot the representatives of the people in their Convention do it, and especially when their action is ratified by the people themselves. The will of the people is more directly obtained in this way than by the Legislature, and it is then known what the will of the people is.
But suppose that the subject is one not left to the will of the people, or the Convention, or the Legislature, and that it is a judicial question, one that some court has jurisdiction over, and that can determine the matter.
What court will it be? Certainly not one in Virginia. It will be said, that it must be a court of the United States, and we suppose it would be claimed that the United States Supreme Court would have jurisdiction.
Admitting, for the sake of the argument, that this is true, and that the plaintiff is the State of Virginia, and that the defendant is the State of West Virginia, and that the suit is in equity, in which the history of the separation of the new State from the old State, and of the indebtedness of the old State are fully set forth, and that Virginia prays that West Virginia be compelled to pay the one-third of the Virginia debt prior to January 1, 1861, what would be the decision of said court on a demurrer to the said bill?
The subject of the division of towns and counties, and the question of the liability of that territory which has been made into a new town or county, has been determined by many of the Supreme Courts of the States, and it has also been determined by the United States Supreme Court. In the case of Commissioners of Laramie County vs. Commissioners of Albany County et ah, reported in 92 U. S. Sup. Court Reports, pages 307-315, we find the principle discussed as to counties and the Court said: “Where the Legislature does not prescribe any regulation, the rule is that the old corporation owns all the public property within her new limits, and is responsible for all her debts, contracted by her before the separation. Old debts she must pay without any claim for contribution and the new subdivision has no claim to any part of the public property, except what falls within her boundaries and to all that, the old corporation has no claim. And the syllabus says: “Held, that the old county being solely responsible for the debts and liabilities it has previously incurred, on discharging them, has no claim on the new county for contribution.”
From this, it must be certain, that Virginia has no claim against West Virginia, until she, Virginia, has paid the said “indebtedness,” and when she has, she has no claim against West Virginia, unless she can make it appear that there was some power, which took the place of the Legislature, and has the right to dictate the terms of separation and had prescribed the terms and conditions upon which the separation was to be made, and those terms required West Virginia to pay the sum claimed by Virginia.
Neither can the court make a distinction between the principle laid down for the division of counties, and that of the separation of West Virginia from Virginia; the separation of a number of the counties of Virginia, from the other counties. The principle of law governing one is applicable to the other.
The doctrine of contribution is too large a subject to here discuss, nor shall we cite authority to sustain the United States Supreme Court, but shall leave the subject to the reader, and let him decide, how he will reconcile this case with the case reported in 25 Gratt, heretofore mentioned.
But suppose that this case is not law in our case, that the action of the people of West Virginia, or her Convention is not decisive, that the provision of the Constitution which leaves the matter to the legislature, is not the controlling power, and that the provisions of the Ordinance in no way binds Virginia, but that the court, will upon equitable principles, determine the matter of the liability of West Virginia. What will West Virginia answer to said bill?
Those who have read the preceding chapters of this work, or have studied the history of the formation of the new State, and have learned the cause of the separation, as shown by the Conventions of Virginia, and her General Assembly and her Legislature and her whole history of her treatment of the people of the west, will find an abundant answer, to show that there is no equity in said bill. How that if the two hundred million dollars’ worth of slave property in the east had been taxed, as the entire property of the western people were taxed, there would have been no need to borrow funds, and had it been borrowed, it could have been paid long before 1861.
From the year 1800, the people of the west clamored for relief against the unjust discrimination on taxation and in 1829 secured from the Legislature, the call of a Convention to amend the Constitution: but in the call., the number of the members of the Convention was determined as well as from what counties they should come, so that the majority of the Convention was given to the part of the State east of the Blue Ridge. By the power of that majority only, did the said Convention refuse to tax ail property according to its value and there was no relief given to the west in this matter.
Thus it continued a matter of contention, until the Convention of 1852 gave an amended Constitution, but this also contained the unjust and iniquitous discrimination and refused to tax slave property at its valuation.
When railroads, canals and public improvements were wanted, or when there was a deficiency of revenue to meet the appropriations, they resorted to borrowing money rather than tax and pay the tax on the slaves at any reasonable valuation, and the entire property of the western man was taxed and collected; and the improvements made in the eastern part of the State. Thus was the debt made and thus was the money expended from the year 1800 or earlier, down to 1861, and no appeal that could be made, would influence the “old Virginian” to make any change, or to treat the western people fairly.
The public debt of Virginia was made and its nonpayment was occasioned, by the unjust exemption of the property of the eastern people. If the wrong had not been perpetrated there would have been no unpaid debt, therefore the claim of Virginia is by virtue of her own wrongs which affords no ground for relief – a wrong never makes an equity.
Neither the fact that this iniquity was perpetrated by a majority under the name of “the law of the land,” prevent the court from enquiring into the defense set up, of want of equity on the par: of the plaintiff, for the court will not give any man, or set of men, the benefit of their own wrong, but they must account for the benefits secured and the wrongs done. The claim of Virginia is based upon an assumption that in all their dealings with the western people there was always fair dealing both in the matter of taxation and in the matter of the expenditure of such funds raised by taxation or by borrowings and the fact is, that this assumption is not true as to either proposition.
The State of West Virginia need not fear any suit that Virginia may bring against her, upon any claim that may be made by Virginia for the payment of one-third of her debt, or any other equitable part thereof.
Virginia issued to her creditors, her new bonds for the two-thirds of her debt, and gave to them a “West Virginia Certificate” for the other third, and it is said she has been released from the obligation of the old bond and is in nowise bound for the payment of the “West Virginia Certificates.” What claim can she have against West Virginia under these circumstances?
The said “West Virginia Certificates” have been bought up, for a song, some say for two cents on the dollar, and are held by a syndicate. This syndicate has no claim against West Virginia, and Virginia will allow no settlement that will leave unpaid any part of the said certificates, so that she will be made liable therefore.
The syndicate of the holders of the “West Virginia Certificates,” which cost them a trifle, have been moving towards securing the West Virginia Legislature, to assume the payment of the certificates. The Legislature of 1895 was approached, and attempts made to have this session pass an Act for the payment of some part of the said debt, after having secured from Virginia the appointment of a commission to adjust on a bases stated. These Virginia commissioners with a number of the syndicate appeared and brought to bear all the influence they commanded. The result was “House Joint Resolution No. 10. concerning the Virginia debt.” as follows:
“Resolved by the Legislature of West Virginia. That this Legislature hereby declines to enter into any negotiations with the debt commissioners, appointed under a joint resolution adopted by the General Assembly of Virginia, in the month of March, 1894, looking to any settlement of the Virginia debt question on the basis set forth in said joint resolution.”
This was adopted by the unanimous vote of both Houses.
But it seems the syndicate were not satisfied that this meant anything, that they construed it as referring to that session of the Legislature only, and only to the proposition made by the said Virginia Legislature, and in 1897, the said syndicate was again before the Legislature of West Virginia, and this time they secured the following:
“HOUSE JOINT RESOLUTION NO. 3.
“Adopted January 21, 1897.
“Resolved by the Legislature of West Virginia. That it is the sense of this Legislature, that West Virginia does not owe one cent of the so-called West Virginia debt, and that this Legislature is opposed to any negotiations on that subject.”
Here is the ascertainment of the amount of the debt of Virginia that West Virginia was to assume and pay, under the authority of the Constitution of West Virginia, when West Virginia was formed, when Virginia gave her consent to said formation, and when Congress admitted her into the Union.
The said ascertainment is made pursuant to the authority of the said Constitution, with the consent of Virginia and Congress, and this is final and conclusive, on ah parties, not only conclusive against Virginia, but conclusive upon West Virginia, for the power or authority has been exhausted and the said Legislature has no other further authority in the matter, and its jurisdiction is functus officio, and West Virginia can not make any debt, nor can her Legislature make any debt, nor can it act any further in the matter of power over the subject, it has been exhausted, and as to said power the Virginia debt question.
The power to ascertain the amount that West Virginia should assume and pay, is conferred upon the Legislature, that Legislature has executed said power and hence there is no further authority or co-authority over this subject, the Legislature is junelux officio, and any attempt by it to exercise further power, would be void, and the enforcement thereof enjoined by the Court.
When a tribunal with competent jurisdiction has determined the matter submitted to it, this decision is conclusive, not only to this tribunal and these parties, but to all persons in all courts, until reversed by an appellate court, authorized to review such cases.
If the Legislature is treated as an arbitrator, the award is final and conclusive.
Bayne vs. Morris, 1 Wall. U. S. 97.
Moose on Arbitration, 226, etc.
Notwithstanding the finality of the action of the Legislature of l897 the syndicate could not resist the impulse to again try the pulse of the Legislature of 1899, and again they procured the sentiment of the Legislature of West Virginia on the subject, perhaps more fully and definitely expressed, if indeed it could be, than heretofore.
In the Acts of 1897, page 234, will be found:
H. J. R. No. 6.
Joint Resolution No. 3.
Adopted January 21, 1899.
Relating to the Virginia Debt Question.
“Resolved by the Legislature of West Virginia: That this Legislature declines and refuses to take any action in regard to what is known as the Virginia debt, or Virginia deferred certificates either by considering any propositions of adjustment or settlement, so-called, or by authorizing the appointment of any committee or committees, having for their purpose the consideration of the same, and that it is the sense of this Legislature that the State of West Virginia is in no way obligated for the payment of any portion of the said debt or certificates.”
Since the election of November 6, 1900, there has appeared an article in a Richmond paper, which is somewhat surprising. It claims that the Republican party in West Virginia has carried the State of West Virginia, and now has control of the Executive, Judicial and Legislative departments of the State and that the said election was secured by money furnished by the syndicate holding the “West Virginia Certificates” and that, if there should be any of the Republican members of the Legislature that shall kick out of the traces there can be secured enough debt-paying Democrats to take their places, and that the time is near when West Virginia will make some arrangement to pay her public debt. And by way of encouragement against kickers, said writer tries to frighten the West Virginia members by saying that Virginia can bring a friendly suit to have the amount determined, or the Treasurer of the United States can be induced to sue Virginia and West Virginia on some Virginia bonds for money loaned to Virginia by the United States belonging to some Indian trust fund. This Virginia paper rejoices that there is to be perpetrated an iniquity against West Virginia and alleges that the members are bought into the traces of the syndicate, to do this villainy.
It seems strange that such a thing would be made public, and more strange that a Virginia paper should rejoice over the probable of the enterprise. But it only shows the estimate placed by the Virginian upon the intelligence and the integrity of the western man. They assume that a West Virginia politician is both ignorant and vicious, a fool and a knave, degraded and corrupt.
When in 1861, the Virginia Convention, in Richmond, saw the people of the west, meant to separate from them, and to prevent them from so doing, they proposed to amend the Constitution so as to “tax all property according to its value.” They thought that this bait would allure the western man into acquiescence, because this was what the Western people had been clamoring for ages.
Again, about 1870, the Legislature of Virginia proposed to West Virginia in order to settle all questions of adjustment of debt, and litigation as to the same and as to questions of boundaries and counties, that West Virginia should give up her State government and return to her allegiance to “Old Virginia” and restore her ancient boundaries, etc.
And now, she adds insult to all else by proclaiming that the West Virginia Legislature have already sold themselves to a syndicate of holders of the “West Virginia Certificates.”
But the Legislature is going to do nothing of the sort, and they have not nor will they dispose of the manhood, their integrity, to any one for any consideration.
They are representatives of an intelligent and incorruptible people and they know that such a people will not submit to being sold, even if the Legislature could purchased.
No, the Legislature will not dispose of the rights of the people of West Virginia for any consideration whatever, and the charge made in the Richmond paper is not true, but a vile slander.
Breathes there a man with soul so dead
That to himself hath never said.”
This is my home, and my own State,
“I” is from Virginia separate.
Nor shall again, for any bait.
Yield her the pow’r to dominate.
Nor sell, nor give, nor delegate
The right to tax, to syndicate.
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