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On the motion of Mr. James, the Convention adopted and referred to the Judiciary Committee the consideration of the following resolution :

“Resolved, That all debts, including State taxes, (and excepting State debt) contracted before April 3rd, 1865, shall be scaled down to (25) twenty-five cents on the dollar; that all actions now pending be stayed, and costs be assessed to the same scale ; and that henceforth no more be claimable by law than (25) twenty-five cents on the dollar of all such debts.”

The committee has had this subject before it, and has considered it as fully as the time and opportunity afforded it would permit. It has arrived at the following conclusions, which I am instructed to submit to the Convention :

The resolution includes all debts contracted prior to the 3rd of April, 1865, and raises no question as to their validity, or the consideration for which they were executed; neither does it draw any distinction between debts contracted before, and during the late war; but includes all alike, without any regard as to whether they are valid or invalid—whether there has been a failure of consideration or not—or whether they were to be paid in Confederate money, or in currency equivalent to gold and silver. And this committee is called upon to say, whether these debts shall be reduced to twenty-five cents in the dollar, and the creditors be compelled to accept that sum in discharge thereof. This proposition raises the question of the power of the Convention to act in the premises, and to afford the relief sought to be obtained.

The Convention that framed the Constitution of the United States had this subject before it; and after mature consideration, determined to deny to the several States all right to interfere, in whole or in part, with the obligation of contracts. This determination, made under circumstances that give to it peculiar weight and sanctity, will be found in the 10th section of the first article of that instrument, which says, “that no State shall pass any bills of attainder, ex. post facto laws, or laws impairing the obligation of contracts.” The condition of the States at the time that Convention assembled appealed strongly to it for relief. The States, impoverished by a long war, were struggling for existence—their currency had become worthless—their citizens burdened with debts, held mainly by foreigners, who, being opposed to the revolution, fled the country at the opening of hostilities, and returned to it at the close of the war, only to enforce the coilection of their debts, and thereby to add to the distress of the country. Yet in view of all these facts, so thoroughly was that body impressed with the inviolability of contracts, that it withstood the popular clamor for relief, and denied to the States all power to impair their obligation of contracts, in whole or in part.

Recognizing the Constitution of the United States as the supreme law of the land, to which obedience is due from every good citizen, the committee does not hesitate to declare that this Convention has no power to scale the debts, as proposed, or to decide that they shall be discharged by any sum less than that agreed upon by the parties thereto. To do so would, to that extent, impair the obligation of these debts, and be in direct conflict with the clause of the ConStittition above referred to. The committee can see no distinction in principle or jaw, between the destruction of a part, and the whole debt : for if the ConVention, as has been shown, has no power, under the Constitution, to impair a contract, or to repudiate the whole of a debt, it certainly cannot release the debtor from a part of it.

In this connection, the committee has considered the resolution offered by Mr. Milbourn, as to the expediency of passing “an ordinance forever forbiding all actions for the recovery of debts, or the interest thereon, contracted prior to the 9th of April, 1865.” The remedies provided by saw for enforcing a contract, are taken into consideration by the parties thereto, and, in legal contemplation, become an essential part of the contract. The creditor may be willing to send his money, or sell his property upon time, when he knows that the law enables him to make collection, should his debtor De in default, who would do neither the one hor the other, if he believed he would be deprived of his remedy, and left at the mercy of his debtor. Being of opinion that the remedies furnished by law for the collection of debts, enter into and form a part of all such obligations, the committee is of opinion that to deny the parties the benefit of these remedies, would not only impair, but utterly destroy, the obligation of such contracts. It would leave the creditor with a right without a remedy, with a debt recognised as valid, without the means of collecting it. In other words, it would be a direct repudiation of the whole debt. *.

The committee is unable to see any distinction, in a legal or moral point of view, in the question presented by the two resolutions. It believes that both are in violation of the Constitution of the United States, and that this Convention has no right whatsoever, to scale the debts in the one case, or to deprive the parties of their remedies in the other.

Being fully convinced of the correctness of these conclusions, the committee does not hesitate to express the Opinion, that any Ordinance, such as contemplated by the resolutions aforesaid, would be held by the courts, both State and Federal, to be unconstitutional and Void, and could, at most, afford the debtor only a temporary relief.

The committee has, thus far, examined these questions only in their legal and constitutional bearing, and might be content to rest their recommendation upon the considerations already presented, but there are other views of the question it desires to present, which it believes are not less worthy of attention. In its opinion, all acts and doings looking to repudiation are immoral in their tendency, and tend to the destruction of all public and private credit ; that they will destroy confidence between man and man, drive industry and capital from the State, and overthrow all the business relations of the country, founded upon the integrity and good faith of the community. Assuming that the State had the power to cancel debts, and could be induced, from temporary causes, to exercise it, what assurance can be given that it will stop with the debts contracted prior to April, 1865? What guarantee have we that repudiation, when once adopted, will not be resorted to, from time to time, as the exigences of the debtor may, in his opinion, require?

Every temporary embarrassment, arising either from idleness or extravagance, from a failure of the crops or the fluctuations in trade, would furnish a pretext for a further exercise of the power, and thus it would go on until repudiation became the settled policy of the State.

The bare agitation of such questions has a baneful influence upon the community. It unsettles the business operations of the State, and deters industry and capital from seeking employment and investment in our midst, for money and capital, which are ever timid, will never extend a helping hand to any community which repudiates its honest debts.

The State of Virginia, as well as its citizens, has thus far met its honest obligations, and sustained a reputation for integrity, honesty and fair dealing, unsurpassed by any State in the Union, and the committee sincerely hope that she will not now, when she has little left to repair her fortunes but her good name and the honesty of her citizens, be induced to adopt any measure that will tarnish her unsullied reputation and bring lasting disgrace upon her people.

In arriving at these conclusions, the committee has carefully considered the peculiar state of affairs relied upon by those who ask such relief. They know that it is contended, that as the debtor was forcibly deprived of all his former slaves and much of his other property, upon the faith of which, he obtained credit—that it would be unjust to require him to pay the whole of his debts. The committee has not been unmindful of the hardships of the case—where Creditor and debtor are alike innocent, who shall bear the loss? Both alike suffered by the events of the war.

It was by no act of the creditor that the debtor lost his property—it was done by the Government, without the consent or connivance of either party—and if that Government were the creditor there would be some reason for saying that the debts should be scaled, or not be paid at all. If the creditor is to be deprived of his rights in this case, he might, with like propriety, be denied them in every other case where misfortune overtakes his debtor, or a third party forcibly strips him of his means to pay, as by the burning of his house, or the stealing of his property. Great as has been the destruction of property during the late war, and heavy as has been the loss of debtors, the committee is unable to see any distinction in principle, or in law, between the classes thus sustained, and those that fall upon property in the ordinary casualties incident to the possession of personal property. F or these, and many other reasons that might be assigned, the committee is of opinion that the Convention has no power to grant the desired relief, and that if it had, it would be unwise and inexpendient to exercise it.

It, therefore, asks to be discharged from the further consideration of these subjects. Respectfully submitted,

January 18, 1868. C. Y. THOMAS, Chairman.

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