Union, to correct, by future legislation, the wrong she has done to the Constitution, and the great injustice she has inflicted on her creditors. No one of the late embarrassed States has in prospect so abundant ability to satisfy the demands of justice, and at the time she created her debt it was believed that no State possessed a firmer integrity to meet those demands; an evidence of which is found in the fact, that her five per cent. bonds commanded, generally, a higher price than the six per cent. bonds of other Western States. And yet Indiana is the only State which has, by legislative act, repudiated a debt acknowledged to be just.

Some of the creditors who subscribed to the completion of the Wabash and Erie Canal. and who thereby discharged the State from one half of their claims, did so under a protest against the unconstitutional and unjust violation of their rights; and they will, under that clause of the Constitution which secures the right of petition, present to the next Legislature of that State, a memorial for a restoration of justice to them; which, if necessary, will be continued to future sessions of it, till the "faith irrevocably pledged by the State" is redeemed.

Justice, bare justice; and that according to the ability of that populous, wealthy, and rapidly increasing State, is all that is asked of it. We believe it impossible that she can continue to withhold this, or that her citizens will be willing for her to stand, and singly too, on the pages of American history, as a repudiator of a just debt. It is believed to be equally impossible in the nature of things, that an American can feel a proper self-respect, whilst the State to which he owes allegiance, is a defaulter in promises which have been so imposingly given by the State.

The creditors of that State residing in Europe, will be requested to join in the petition which will be presented to the Legislature at its next session. A SUBSCRIBER UNDER PROTEST TO THE $800,000 LOAN.

PUBLIC DEBT OF INDIANA.

WASHINGTON, 27th July, 1848.

I have observed, in the "Journal of Commerce" of the 6th inst., an article addressed "To the creditors of the State of Indiana," by a correspondent who signs himself "A subscriber under protest to the $800,000 loan." The circulation of this article in the columns of your respectable journal, is calculated to do great injustice to the State of Indiana; and I do not hesitate to request that you will permit me to refute, through the same medium, its unjust imputation upon the people of that State.

Your correspondent has chosen to characterize the State of Indiana as a repudiating State. This unwarrantable accusation is based by him upon the fact of her recent arrangement with the holders of her bonds, by which a portion of them have been surrendered,-an equal moiety of them being canceled in consideration of the transfer of the Wabash and Erie Canal, and the remaining moiety provided for by new certificates of

stock. The subscriptions under this act he calls a "forced loan," and insists that the subscribers have been "compelled to discharge the State" from a portion of her liability. A plain narrative of facts will show that there is not the slightest foundation for this aspersion of the integrity of a State, which has yet done nothing to tarnish its honor or to cause its citizens to blush.

There has never been, at any time, within the State of Indiana, a repudiating party. I readily admit that a few persons may have talked of refusing payment of a parcel of bonds sold to the "Morris Canal and Banking Company," for which the State, at that time, had received no consideration. These were so few in number that they were unable to make any impression upon the public mind. The people, of all parties, were willing to pay, and intended to pay, every dollar of the principal and interest of their debt. It is true, they suspended the payment of interest; but this was done under circumstances so unavoidable, as to excuse the omission in the estimation of all candid and impartial men.— The State had no agency in bringing about these commercial and financial embarrassments which were visiting all parts of the country with their blighting effects. She suffered from them, in common with other parts of the Union, and only asked of her creditors that she might have a little time to reinvigorate her energies and give new impulse to her industry. Nobody complained of her, except a few, who, like the Jew in Shakspeare, have so trained their minds to think of dollars and cents, that they will insist upon the sum "nominated in the bond," though the life of the victim and even their own honor were the forfeit.

At the time the incipient steps were taken which resulted in the passage of the act referred to by your correspondent, the payment of interest had not been resumed. These incipient steps were taken by the bond holders themselves, and not by the citizens of the State.

Differences of opinion had arisen in the State, as to the best mode of disposing of the 800,000 acres of land granted by Congress to extend the Wabash and Erie Canal from Terre Haute to Evansville. It was known to every body that these lands did not constitute a part of the general internal improvement fund, and could be applied only to the purposes designed by Congress. To secure this result, and to concentrate public opinion on the subject, as far as possible, before the action of the Legislature, it was deemed advisable to hold a convention of delegates from those counties of the State immediately interested in the grant.The first proposition to hold this convention came from myself, and had no reference whatever to the adjustment of the State debt. It assembled in Terre Haute, in May 1845, and I am convinced that not a single delegate came to it with the remotest idea of applying the proceeds of these lands to the pay ment of the State debt. That was not the purpose for which they had been granted-nor had the Wabash and Erie Canal ever been considered a part of the general system of internal improvement; or, in any way, bound for the payment of any other part of the public debt than that created for its construction.

Very shortly before this convention met, it was understood that it would be attended by a gentleman from the city of New York, who was the authorized and acknowledged agent of the holders of Indiana

State Bonds. This gentleman-Charles Butler, Esq.,-did attend it. He addressed the convention in a very able speech, which was reported and published. I have not now before me, either the proceedings of the convention or this speech of Mr. Butler; but I very distinctly recollect, that he then suggested, for the first time, that these lands and the finished part of the Canal might be made the basis of an arrangement of the State debt. Thus your correspondent and readers will see, that both the bond-holders and the State may trace what adjustment has taken place, to this convention and these suggestions of Mr. Butler;-suggestions which were entitled to great weight, from the fact that they came from a gentleman who freely stated that he represented a considerable portion of the creditors of the State.

Mr. Butler, at that time, did not state that he was authorized to propose a plan of adjustment, but stated that he expected to attend the next session of the Legislature, at which time he thought he would be fully deputed to do so.

He did attend the ensuing session of the Legislature, in the capacity of agent of bond-holders;-how many or what bond-holders I did not then, nor do I now know. As such agent he formally addressed to the Legislature his plan of adjustment. It originated with himself, or those whom he represented. No suggestions in regard to its main features were made by anybody authorized to represent the State. Nothing was done in the Legislature, until this plan was communicated to it. When this was done, the Legislature acted wholly upon the suggestions of Mr. Butler, and passed a bill embodying all the general and important features of them. This bill was taken by Mr. Butler to Europe, and laid before a deputation of the foreign creditors of the State. Some amendments were suggested by them, and Mr. Butler upon his return to the United States, again visited Indianapolis, and laid these before the Legislature.— The most, if not all of these amendments, were finally adopted, and the arrangement now complained of by your correspondent, was thus consummated.

The following are the leading conditions of this arrangement, to wit: The State obliged herself that, if one-half of her outstanding debt should be surrendered in a given time, she would issue new certificates, of stock for the remaining half, and, in consideration of the surrendered half, would transfer the Wabash and Erie Canal, with all its lands, tolls, water rents, &c., to trustees, for the sole use of those who should consent to the arrangement. This has all been done, in good faith, by the State, and cestui que trusts are now deriving the benefit of it.

Before the passage of this act, the State had expended on the Wabash and Erie Canal proper, about $4,000,000, and on that part of the canal between Terre Haute and Evansville about $250,000. About three hundred and fifty miles, of the whole line, were completed, and about one hundred miles remained to be finished with the proceeds of the lands granted by Congress. The cost of completion was estimated at $1,250,000, and it was generally believed that the lands would be sufficient for this purpose-or very nearly so. The nett tolls and water rents then annually received varied but little from $100,000, and were gradually increasing. Mr. Butler,-(I speak from my recollection only, having no

documents before me)-estimated that when the whole line should be in operation, from Toledo to Evansville, they would reach nearly or quite $500,000 annually, if they did not gradually rise above that sum. ́All this has been transferred for the benefit of the trust.

It will be seen that for half the debt-say for $5,500,000-the State has conveyed to her creditors a canal upon which has already been expended $4,250,000, and to which the holders of the surrendered bonds are to look for the principal and interest thereof. If the tolls and water rents of the canal,-as intimated by the agent of the bond-holders—shall amount to $500,000 annually, the bond-holders will receive annually, more than the aggregate of interest upon the surrendered debt, with a surplus to be applied to the payment of the principal. But if this estimate is too high, (and my own impression is that it is not high enough,) it is certainly not the fault of the State of Indiana. Mr. Butler had access to every possible source of information on the subject,-made his own estimates,-presented them to the bond-holders before the arrangement was finally made, and everybody understood, at the time, that they were satisfactory to him and them. At all events, it was their own proposition, and it is too late for them to object or complain. The State acted, from first to last, at the instance of the bond-holders, and, in point of fact, did not originate any part of the proposition.

Since the commencement of the present session of Congress, an act has been passed confirming to the State an addition of 60,000 acres of land, the proceeds of which are to be added to the canal fund. This has also passed into the trust. The proceeds of these lands-together with what may be realized from the 800,000 acres-will probably complete the canal, from its present termination to the Ohio river, without the expenditure of a single additional dollar by the bond-holders. If the canal is completed before the lands are sold, and the increase in their value thus taken advantage of, it is quite as probable that the sum realized from all the lands will be considerably more than will be thus expended. I am confident, that, in no event, will there be a large expenditure over and above the proceeds of the lands. It is not, therefore, at all difficult to ascertain the precise condition of things between the State and her creditors.

At the time of the arrangement under this bill of Mr. Butler, her outstanding debt was, say $11,500,000. Of this sum the State had actually received and expended but about $8,500,000. Her actual losses were about as follows, to wit:-by the Morris Canal and Banking Company, about $1,800,000;-by the Erie County Bank, about $500,000; by the Georgia Lumber Company, about $250,000;-by the Detroit and Pontiac Rail Road Company, about $90,000, and by the Merchanst' Exchange Bank of Buffalo, about $180,000. These sums, in the aggregate, amount to $2,820,000-but the actual sum, if the amounts were precisely ascertained, would not be likely to fall short of $3,000,000. No body in Indiana, within my knowledge, ever thought of resisting the payment Some citizens of the public debt than this. part of the State thought that the bonds covering this amount should not be paid, beyond what was realized by the securities which the State ultimately obtained. But, as already stated, even these were few in number.

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A very large majority of the people-perhaps seven or eight-tenths of them were in favor of paying the whole debt. And the whole is embraced in the arrangement complained of by your correspondent:-the lost bonds being included, as well as those for which full consideration was received.

I have stated that the State had expended upon the canal already transferred, the sum of $4,250,000, and that the whole line would be completed, or nearly so, without any expenditure beyond the value of the lands. She recognizes her liability for half the entire debt, $5,500,000and has issued, or is ready to issue, new certificates of stock for the payment of it. She is now paying the interest upon these new certificates, and will, beyond any question, pay the principal as it becomes due. Add to this recognized and unpaid debt the amount expended on the canal before the transfer-$4,250,000—and we have an aggregate of $9,750,000. This is the sum which the State will have paid, exclusive of interest, when these new certificates are all discharged; and it amounts to about $1,750,000 more than she has ever received, in actual cash or in available means, from the sale of all her bonds!

With what sort of propriety and justice, then, does your correspondent charge upon the State of Indiana that she has repudiated any part of her debt? He knows, or ought to know, that his charge has not the slightest foundation. I assert, without the fear of contradiction, by any body informed as to public sentiment in Indiana, that had not our bondholders pressed and urged upon the State, the arrangement now complained of, the State would, before this time, have resumed the payment of interest, and would ultimately have paid every dollar of her debt.No body in Indiana, within my knowledge, ever thought of proposing to compromise the debt by paying less than the full amount,-other than as I have stated in regard to the $3,000,000 of lost bonds. No body there, within my knowledge, ever thought of preferring creditors, in any other manner than as this preference connected itself with the proposition coming from the bond-holders themselves. No body there, within my knowledge, ever thought of conveying away the Wabash and Erie Canal, until Mr. Butler suggested his plan of paying the public debt.— No body there, within my knowledge, ever thought, before Mr. Butler's suggestion, of making the Canal answerable, in any way, for any part of the general internal improvement debt. All these things originated with the bond-holders! They matured the plan of settlement, and the first time it was heard of in Indiana was when presented by Mr. Butler as their agent. The bill which finally passed the Legislature was drawn by Mr. Butler, or under his immediate supervision, and my present impression is, that the section now complained of by your correspondent, as giving preference to bond-holders, was contained in the original bill as presented by him to the Legislature. However this may be-and my recollection is not sufficiently good to state it positively-it is certain that it was consented to by Mr. Butler,-that it was in the bill which first passed and which was laid before the bond-holders in England,— that the bond-holders did not ask it to be stricken out, and that all who have surrendered bonds-(your correspondent among the rest,)——were fully and always apprised of its existence and effect.