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 but decreased the tax rate from forty to ten cents per hundred dollars, and thus made the payment of interest absolutely impossible.

Later in the year the bondholders presented a second proposition, in which they agreed to a scaling of the debt fifty per cent., but this was also rejected by the Legislature.

In 1879 a committee was appointed by both Houses of the Legislature to investigate and report upon the State debt. This committee, after taking a great amount of evidence, presented an elaborate report. Acting upon this report the Legislature passed a second bill, March 31st. It provided for the issue of bonds bearing four per cent. interest to be exchanged for outstanding bonds with the interest accrued thereon, at the rate of fifty per cent. on the dollar. It was not to become a law until approved by a vote of the people, and two thirds of the bondholders. The consent of the bondholders was readily obtained, but the measure was defeated at the polls.

A settlement of the debt now seemed hopeless. It was the chief issue in the gubernatorial campaign of 1880. The divisions of the Democratic party resulted in the election of the Republican candidate, Alvin Hawkins. The newly elected Legislature was also favorable to the bondholders. A bill was passed which provided for the funding of the outstanding debt at par, the new bonds to bear interest at three per cent., and the coupons to be receivable for taxes. The bill was signed by the Governor, and went into effect in April. It was regarded as a great triumph for the bond-*holders, but their rejoicing was short-lived. In a test case the courts decided the law unconstitutional, on the ground that the Legislature could not make a valid contract in which the coupons should be receivable for taxes for ninety-nine years. This decision reopened the whole question.

The defeat which the Democrats had suffered in 1880 served to unite them in 1882. Their candidate, W. B.