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 OF THE 
 
 DIVERSITY OF ILLINOIS 
 
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 Univ.of 111. Library 
 
 53 
 
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 MEMORIAL 
 
 
 TO THE 
 
 GENERAL ASSEMBLY OF THE STATE OF INDIANA, 
 
 OF THE 
 
 HOLDERS OF CERTIFICATES OF STOCK 
 
 
 ■ 
 
 
 OF THE 
 
 
 -. W 
 
 WABASH & ERIE CANAL, 
 
 ISSUED BY THE 
 
 
 
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 11 
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 ■ 
 
 
 STATE OF I ADI AAA. 
 
 
 January, lBTl. 
 
 
 
LIBRARY 
 OF THE 
 
 UNIVERSITY OF ILLINOIS 
 
 MEMORIAL 
 
 OF THE 
 
 HOLDERS OF CERTIFICATES OF STOCK 
 
 OF THE 
 
 WABASH AND ERIE CANAL, 
 
 ISSUED BY THE 
 
 STATE OF IWDIASTA. 
 
 > < ♦ > < 
 
 To the General Assembly of the State of hidiana: 
 
 The undersigned Committees, representing the holders, 
 both foreign and domestic, of the stock of the State of 
 Indiana, secured by a lien on the ANabash and Erie Canal, 
 are instructed to ask your attention to the provisions of the 
 acts under which the certificates were issued, to the present 
 condition of the security, and of the stock for which it was 
 placed in trust, with the view of obtaining from you such 
 relief as in justice and equity the bond-holders may be 
 entitled to. 
 
 The preamble to the Act of 1846 is to the following effect: 
 
 “ Whereas, honor and justice alike require that such 
 equitable provision should be speedily made for the dis¬ 
 charge of the pecuniary obligations of the State as shall be 
 
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 just and acceptable to its creditors, honorable to the people 
 of Indiana, and at the same time within the ability of the 
 State, without further involving the people in a general 
 debt; And whereas, an arrangement, based upon a mode¬ 
 rate system of taxation, and completion of the Wabash and 
 Erie Canal to Evansville, it is believed will secure the 
 objects aforesaid; And whereas, in order to insure so 
 desirable a result, a large portion of our bond-holders have 
 manifested a willingness to aid in the completion of said 
 canal , within the ensuing four years, to the Ohio River; 
 And whereas, this proposition embraces, as a general ar¬ 
 rangement, the payment,! by taxation, of two-and-a-half 
 per cent, on the unprovided public debt of the State, and a 
 reliance for the remaining two-and-a-half per cent, on the 
 lands, tolls, and water rents of said Wabash and Erie Canal 
 (after paying expenses of construction and repairs), thereby 
 greatly relieving the people of Indiana from burdensome 
 taxation, and virtually discharging them from any liability 
 for the said remaining interest , and looking alone to the 
 said canal, its tolls and other revenues, for half the interest 
 on said entire public debt; And whereas, there is reason 
 to believe that the plan embraced in the following provisions 
 is entirely within the means of the State successfully to 
 accomplish—that it will be acceptable to our creditors—hon¬ 
 orable to the people represented by this General Assembly, 
 and will add to the wealth, prosperity and advancement of 
 Indiana : Therefore, Be it enacted,” etc., etc.” 
 
 The Act of 1846 in its enacting clauses embodied the basis 
 on which it was proposed to adjust the debt, viz., by dividing 
 the interest only, as set forth in the preamble, one-half to 
 be paid by taxation, and one-half by the canal tolls, revenues, 
 Ac. By the 32d section of the same act, the State reserved, 
 however, the option of dividing the principal, also, by calling 
 
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 in, at her pleasure, the certificates which were to be first is¬ 
 sued under the 1st section of the act, and issuing, in lieu 
 thereof, two certificates for the principal, one chargeable on 
 taxation and the other chargeable on the canal, its tolls, 
 revenues, &c. 
 
 This option was exercised in the first section of the sup¬ 
 plementary Act of 184-7, and the certificates were then issued 
 in the form in which they now exist; as the bond-holders, by 
 this provision of the act (sec. 32), were to look to the canal, 
 its tolls and revenues exclusively as a security for the pay¬ 
 ment of the one-half of both principal and interest of the 
 original debt, they required more specific guarantees and 
 covenants for the protection of the security thus provided 
 than were contained in the Act of 1846. Hence, for this 
 purpose and also to supply other deficiencies in that act, 
 the Act of 1847 was passed, which contains, among others, 
 the following sections, viz.: 
 
 Section 14, Act of 1847, declares that “ in order to demon¬ 
 strate the good faith of Indiana, and for the removal of all 
 doubts, and with a view to create general confidence in the 
 arrangements made by the State for the liquidation of its 
 debts, be it enacted, that the tolls, revenues and profits of the 
 said canal and its appurtenances, present and future, etc., etc., 
 shall remain and be inviolate and in full force ; and the 
 payment of the principal moneys and the interest on the 
 certificates and stock intended to be created pursuant to the 
 said act and this act, and all the certificates and evidences 
 of the title thereof, respectively, shall be and continue effect¬ 
 ual and inviolate by the means aforesaid , until the objects 
 and purposes of the said act, and of this present act, shall 
 be fully accomplished.” 
 
 Section 22 declares : “ The debt which it is the object of 
 
 UBRARY - 
 
 UNIVERSITY OF ILLINOIS 
 
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 the trust created by the said recited act (as amended by this 
 act) to liquidate, as in the said act is mentioned, having 
 been contracted under the authority of the State of Indiana, 
 and for the service of the people of that State , and it being 
 desirable, as well for the credit of the State, as also to 
 establish confidence in the public in general, and the 
 subscribers in particular [meaning the subscribers to the 
 advance for the completion of the canal to Evansville], to 
 secure the utmost punctuality in the fulfilment of the objects 
 of the said trust, it is hereby declared, that the tolls and 
 revenues of the said canal, present and future, and the lands 
 and lots so conveyed or intended to be conveyed, as herein¬ 
 before mentioned, and the proceeds thereof, when sold, shall 
 be, and the same are hereby specially pledged, to form a dis¬ 
 tinct and particular fund for the redemption of the stock and 
 certificates to be issued in pursuance of the said recited act 
 and of this act; and the said State shall not direct or per¬ 
 mit any appropriation to be made of such tolls and revenues, 
 lands and proceeds, or any of them, for the general purposes 
 of the State, or otherwise howsoever , other than, and except 
 for the purposes of the said trust, as directed by the said act 
 (as amended by this act), until the said stock and certifi¬ 
 cates, and all interest thereon, shall have been fully paid and 
 satisfied out of the tolls and revenues of the said canal, or 
 the State shall have redeemed said stock and certificates by 
 the payment of the principal thereof / the right of doing 
 which, after twenty years, from the nineteenth day of Jan¬ 
 uary, 1846, is hereby reserved by the State, as provided in 
 the act to which this is an amendment.” 
 
 These were positive and comprehensive covenants, not 
 only restraining the State from every kind and degree of in¬ 
 terference with the present and prospective revenues of the 
 canal, which were the sole security and reliance of the credit- 
 
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 ors, but imposing upon it also the most sacred obligations to 
 maintain that security and reliance, unchanged in character 
 and unimpaired in value, until their debt was paid. 
 
 They were assurances and pledges of good faith by the 
 State of Indiana to her creditors, which constituted the very 
 essence of the contract , which were required by the nature of 
 that security, and were expressly designed to establish the 
 confidence of the bond-holders in particular and the public 
 in general in the arrangement, and to induce the former to 
 believe that they would be justified in surrendering their 
 bonds, taking in lieu thereof the new securities, and in 
 advancing large sums of money for the prompt and effective 
 completion of the canal. 
 
 All these provisions were evidently inserted, not only to 
 demonstrate the good faith with which the State of Indiana 
 intended to provide for the full and complete payment of her 
 existing indebtedness, principal and interest, but also to as¬ 
 sure her creditors that if they complied (as they have done) 
 with their part of the contract, she, on her part, would neither 
 do, permit, nor suffer any act tending to diminish, divert or 
 interfere with the tolls, revenues, etc., of the canal. 
 
 The subsequent enactment of a general Railroad Law, 
 which enabled competing lines of railroads to destroy the 
 revenues of the canal, has interfered with and absolutely 
 prevented the carrying into effect the provisions of the Bill 
 of 1846-’47, and the holders of the Canal Certificates, by no 
 fault of their own, have been deprived of the security which 
 the State had set apart for their benefit. And although they 
 have received from the State payment of one-half of the debt 
 originally held by them in 1847, they have yet on hand, 
 practically valueless, one-half of the said original debt, with 
 
 accrued interest unpaid, unprotected and unprovided for. 
 
 The claim, therefore, of the bond-holders is predicated on 
 
 this breach of faith on the part of the State, whereby the 
 
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 security pledged for the payment of their debt, and on which 
 they relied, was destroyed. They also claim that, if the 
 State has violated that proviso of section 8 of the Act of 
 1847, which declares “that the State will make no provision 
 whatever hereafter to pay either principal or interest on any 
 internal improvement bond or bonds until the holder or 
 holders thereof shall have first surrendered said bonds to 
 the agent of State, and shall have received, in lieu thereof, 
 certificates of stock, as provided in the first section of this 
 act, anything in this act to the contrary notwithstanding,” 
 by the payment of any of the internal improvement bonds 
 then outstanding, principal and interest, that in law and 
 equity she is bound to do equal justice to all other of the 
 creditors. 
 
 In submitting this brief memorial, we declare our convic¬ 
 tion that the time has arrived for a full and fair understand¬ 
 ing of the claims of the Canal Certificate holders, and how 
 far they are entitled to consideration and recognition. While 
 those we represent have no doubt that they have a just claim 
 against the State of Indiana for the payment of these certifi¬ 
 cates, with arrears of interest, according to the terms of the 
 act, we are aware that a portion of the people of your 
 State entertain an opposite view, and consider that the 
 Wabash and Erie Canal was taken by the bond-holders in 
 full payment of one-half of the old State Bonds, issued from 
 1832 to 1839. This interpretation, however, we do not consent 
 to. We regard it as utterly repugnant to the plain letter of the 
 acts. In order, therefore, to remove all doubts on this point, 
 and to prove to your honorable body and to your constituents 
 that the bond-holders desire nothing from you but what they 
 are justly entitled to, and, anxious as we are to dispose of this 
 entire question on the highest ground of justice to .the State, 
 her people, and the claimants, we respectfully ask that, if you 
 
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 are not willing to grant the relief asked for, your honorable 
 body will consent to submit the question of the State’s lia¬ 
 bility in the premises, and the stock-holders’ rights, to such 
 judicial tribunal as your honorable body may select, and by 
 whose decision we are willing to abide. 
 
 All of which is respectfully submitted. 
 
 New York, December , 1870. 
 
 For Messrs. Dent, Palmer & Co., 
 
 44 44 N. M. Rothschild & Sons, 
 
 u 44 Baring, Brothers & Co., 
 
 44 44 Frederick Huth & Co., 
 
 r 
 
 i 
 
 i 
 
 j 
 
 London Committee , 
 representing the holders 
 of Indiana Canal Cer¬ 
 tificates. 
 
 44 Estate of George Peabody, 
 
 George Mosle, 
 August Belmont, 
 James Tinker, 
 
 A. Gracie King, 
 
 New York Committee, 
 representing the holders 
 of Indiana Canal Cer¬ 
 tificates. 
 
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