or one-half the estimated cost, using the revenues of the canal and the procee proceeds of the lands, or the lands themselves, for the balance. The latter mode is proposed and expected to be adopted. It is not doubted that contracts for the work may be made, payable partly in cash and partly in land, at its fair appraised value. The money to be advanced as the work progresses, and the land to be conveyed to the contractors when the work is finished. An experienced and responsible contractor proposes to take the contract for the completion of the entire canal from Covington to Evansville, within the four years limited by the act, at the estimated cost, with a cash advance of $600,000, to be paid one-third the first, one-third the second, and one-sixth each of the last years; and to rely on the tolls of the canal and the proceeds of the lands for the entire balance. The canal is required to be finished within four years from the time the act takes effect. The net revenues of the canal during the period of five years, (1847 to 1851 inclusive,) amount to $933,700, as estimated by Messrs. Williams, Fauntleroy, and Ball, which, added to the proposed cash advance, it is perceived will make about $1,733,000, leaving about $510,000, (after paying the interest annually on the cash advance, as provided for by the law, at six per cent.,) to be realized from the lands, and the debts now due for land, during the period of construction, in order to cover the whole cost. For the cash advance, (including the revenues of the canal, annually applied as above on the subscription,) the party is entitled to receive a certificate of stock, bearing six per cent. interest, payable half-yearly, which interest is required to be first paid out of the revenues of the canal, and the principal of the same out of the proceeds of the lands and contracts; and if there should be any balance remaining after applying the lands and contracts, then it is to be paid out of the tolls and revenues, so that the subscribers to the advance, in effect, hold a lien upon the entire canal from the State line to the Ohio river, and all its resources, for the repayment of the same, and which will have cost $6,642,991 93, excepting that after 1st January, 1853, the interest in full is to be first paid out of the tolls of the canal lying east of Lafayette, on the stock issued for the original Wabash and Erie canal bonds. In any mode to be adopted, it will be expected to ensure the payment of the interest on the certificates issued for the cash advances regularly every six months from the start, as the revenues of the canal will enable the trustees to effect the same. The subscription required by the act for the completion of the canal (and which must be made and ten per cent. paid up before any part of the act can take effect) is nominally $2,250,000, and it is required to be made by the 1st of January, 1847. It is equal to about twenty per cent. upon the principal of the entire amount of bonds outstanding. The cash payment required on account of it, supposing that all should subscribe, would, on the principal above stated, be equal to, say six to eight per cent. upon the principal of the bonds. This amount is liable to be increased by the omission on the part of bondholders to subscribe, If the act takes effect by the filling up of the subscription, the bond holders will then receive from the State 2 per cent. per annum on the entire principal of their bonds, or 4 per cent. on one-half, to be paid by taxation, commencing the half yearly payments on the 1st July, 1847, up to January, 1853, and thereafter two and a half per cent. on the whole, or 5 per cent. on half, besides the annual dividends from the revenues of the canal as above stated. The revenues of the canal, by the terms of the law, (from and after the 1st January, 1847,) are to be applied-first, to the payment of the interest on the money advanced to finish it; second, to the payment (as far as they will go) of the interest falling due after January, 1847, upon the bonds held by the subscribers to the advance; third, to the payment in full of the back interest charged upon the canal, accruing prior to 1st January, 1847, and for which the parties hold "special stock," with 5 per cent. interest thereon, as above specified, first paying the special stock held by the subscribers. Transferable certificates of stock (similar in form to New York and Ohio stock) will be issued to holders, in place of the present bonds and coupons, which are required to be surrendered. Transfers are to be made in the city of New York, at which place the principal and interest will be made payable. Interest in all cases is to be paid half yearly. It is perceived that the back interest and deficiences of interest on the State's half of the principal is to be funded in stock, bearing two and a half per cent. interest from and after 1st January, 1853. The reduced rate at which this portion of the arrears of interest is to be funded was found to be indispensable, in order to bring the amount of interest to be paid annually on the public debt, from and after January, 1853, within the ability and resources of the State. To provide for the liabilities of the State upon this basis, a revenue bill was simultaneously passed, fixing the State tax at two and a half mills on the dollar, (or twenty-five cents on the hundred dollars,) besides a poll tax of seventy-five cents. The mill tax is calculated to operate upon a fair and actual valuation of the entire property of the State, real and personal, and the entire proceeds will be required, together with the proceeds of the poll tax, to enable the State to meet its obligations according to the provisions of the bill, as above set forth. The State expenses are restricted, for a period of fifteen years, (up to 1860 inclusive,) to a very small annual sum. The tax required to provide for the first semi-annual payment (1st July, 1847) is now being assessed, and will be collected the ensuing fall and winter. If from any cause there should be a deficiency in the current revenues of the State, whereby they should at any time be unable to meet the interest (4 per cent.) between January, 1847, and January, 1853, such deficiency is provided to be paid at the latter date, in cash, with 6 per cent. interest added, from the time it should have been paid. Such contingency, it is believed, could only happen from one or two causes, viz: first, from an unexpected and unequal reduction in the assessed value of property in some counties of the State, and which might require legislative action to correct it; or second, from the unexpected payment, in any one year, of a larger portion of the revenue in State scrip now outstanding than is estimated by the Auditor of State, in which event the deficiency would fall upon and be made up by the revenues of the succeeding years. The amount of State scrip outstanding, and receivable on the face of it for taxes, and for which no other provision is made or can he made for its paymeut, is $638,435, which is expected to be absorbed entirely out of State revenues, between 1847 and 1853, and allowance for which had to be made, and therefore the State could only provide during that period for the payment of 4 per cent. interest on the onehalf, as above. It is proper to add, that if the subscription be not made by the 1st January, 1847, and 10 per cent. paid into the hands of the trustees, the law will expire, and the bondholders will be left as if it had not been passed, with the exception of the effect to be produced by the rejection of the measure, which it is presumed the American bondholders will fully understand. I cannot urge upon you too strongly the importance of aiding to fill up the subscription, and thereby encourage and strengthen the State in her efforts to redeem her credit. If the plan be adopted, it is confidently believed that the entire amount of principal and interest of the bonds will be abundantly secured and ultimately paid. I append hereto several tables illustrating the operation of the law, if carried into effect. Expecting to be absent from the country until about the first of October next, the subscription will be opened under the direction of Messrs. Winslow & Perkins, at their banking-house, No. 40 Wall street, and application may be made to them, or to James G. King, esq., at the office of Prime, Ward & King, for any further information which any party may wish to obtain on the subject. Communications addressed to me, at my office, will also receive attention. CHARLES BUTLER, No. 20 Nassau street, New York. Resolutions of the London Committec. 1. That under the circumstances stated in the report of Mr. Charles Butler, confirmed by a letter from his excellency James Whitcomb, dated 5th February last, addressed to Mr. Palmer, it is the opinion of the undersigned that it will be for the interest of the bondholders of the State of Indiana to concur in the principle laid down in the act of the legislature, passed at Indianapolis, on the 19th January last, for the adjustment of the public debt of that State, by the payment of one moiety of the principal and interest by taxation, and the other moiety by the property and tolls of the canal, from the State line adjoining Ohio, to Evansville on the Ohio river, such property to be assigned to three trustees, and the State to be freed from responsibility on that portion of the debt and interest so to be secured. 2. That Mr. C. Butler be requested to apply to the bondholders of the State of Indiana, resident in the United States, for their co-operation with the bondholders in Europe, in carrying out the arrangement upon the principle stated in the foregoing resolution. N. M. ROTHSCHILD & SONS, PALMER, MACKILLOP, DENT & CO., FRED'K HUTH & CO., LONDON, 30th May, 1846. TABLES. No. 1. Net revenues of the canal, as estimated by Jesse L. Williams, R. H. Fauntleroy, and W. J. Ball, engineers, provided it is finished. Interest from taxation, to be paid semi-annually, from and after 1st Jan uary, 1847. The interest money to be paid by taxation, annually, will cover the cash advance to be paid by subscribers. This is on the assumption that all should come in. No. 3. Statement showing the cost of finishing the canal, and the means required— when and how derived and applied. Nominal amount of subscription required by the act to be made before the 1st day of January, 1847. *In consequence of re-building some structure this year. $2,250,000 Estimated cost of finishing the canal... Cash advance to be paid by subscribers..... viz : $2,010,000 $800,000 1846-'7. Cash 10 per cent., required by the law to be paid by the 1st January, 1847, on the nominal subscription... $225,000 175,000 200,000 200,000 1850. The net revenues of the canal, from year to year, for 1847, 48, 49, 50, and $51, to be applied on the subscription, and which are estimated at, say... The balance to be paid out of the proceeds of the sales of lands, and contracts, and the land itself, say. 800,000 700,000 510,000 2,010,000 208,776 NOTE. A further deduction should be made for the annual expenses of the trustees' office, which are to be paid out of the net revenues of the canal. It is believed that the lands may be made available of a larger amount in the canal work than is above estimated, and so as to leave the above net amount to be realized from the canal, and applied as above. The canal being finished, the proceeds of the lands and contracts remaining on hand are to be applied to the repayment of the principal of the cash outlay, say $1,500,000 No. 4. Table showing $20,000 of bonds arranged under the bill. 1st January, 1847, twenty bonds, $1,000 each, surrendered.. $20,000 1st January, 1847, six years' back interest. 6,000 Total, (amount due January, 1847,).. 26,000 |