University of Virginia Library

CHAPTER IX

THE READJUSTER PERIOD, 1879-1883, AND THE
STATE DEBT SETTLEMENT

After the elimination of the carpetbaggers and the undoing
of a large part of their work in the early seventies, little of
interest occurs in the political history of the State until the
debt controversy gave birth to the Readjuster party in 1879,
and revived the race question in politics. The recrudescence
of the race question has occurred in Virginia politics only in
times of political stress, when the negro vote has been necessary
to keep certain elements in power. Just as the carpetbaggers
had thus won supremacy for a short time during
Reconstruction, and had made the race question a political
issue during the several years that followed in order to regain
their supremacy, so General William Mahone—taking advantage
of the debt problem—built up a powerful political machine
with the aid of the negro votes, dominated state politics
from 1879 to 1883 and, after his defeat, continued to make
the race question a campaign issue for several years longer,
with the hope of regaining power.

The Readjuster movement grew out of the inability of the
people of Virginia in their crippled financial condition to construct
a satisfactory policy in regard to the state debt. The
history of this movement is one of great interest and importance
as a chapter in Virginia history, during a critical period.
It resembled the days of Reconstruction in its radical tendencies,
and in the type of its leaders, who used the negro vote to
further their ends. Its influence on party alignment may still
be perceived.

The state debt of Virginia presented to her people one of

the hardest and most distressing problems which followed the
war. It was a menace to the peace and prosperity of the
Commonwealth for almost a generation. With the exception of
a small debt created by the "Restored Government," Virginia
had incurred no debt since 1861 which the Federal Constitution
allowed her to pay. When she seceded on April 17,
1861, her public debt (including $675,358.85 interest due)
amounted to $35,334,740.23. On April 30, 1871, the debt, with
accumulated interest, of the newly constructed state, amounted
to $45,350,511.91.[1]

The principal of this debt had been made in the best interest
of the Commonwealth, and at a time when it could well
afford to incur such indebtedness. Had war not intervened,
the great part of the investments for which most of the debt
was made would have been sound. A proper understanding
of the controversy over it can only be had through a knowledge
of how and for what purpose the debt was incurred.[2]

Most of the debt was contracted for internal improvements.
Virginia began as early as 1787 to subscribe to the stock of
internal improvement companies. It was largely through the
influence of George Washington that the State took this step
in lending its aid to private enterprises. In 1816, the General
Assembly of Virginia created a fund for internal improvements,
and also a Board of Public Works, in whose charge
this fund was placed. During the session of 1819-1820, the
State modified her former policy by assuming unaided the
completion of certain great works of internal improvement,
while continuing aid to smaller companies through the Board
of Public Works. The first of the great corporations was the
James River Company, which the State purchased from its

owners in 1820. The Commonwealth proposed to connect the
tidewater with the Ohio River by opening up the James and
Kanawha Rivers, and connecting them with an improved
turnpike. By an Act of February 17, 1820, the legislature
authorized the State to borrow $200,000 for this enterprise.
It was under authority of this act that Virginia issued her first
bonds. Three years later the office of Second Auditor was created
to keep the account of the corporations managed by the
Commonwealth, and a state engineer was employed. By 1833,
the debt had passed the one million dollar mark and in 1837,
exceeded three and one-half millions. In that year, the State
was aiding, in addition to river improvement, canal and turnpike
companies, seven railroad companies. Progress, however,
had been slow on account of political and sectional discord
and because the people as a whole continued to favor canals
rather than railroads.

The year 1838 marked a turning point in the history of the
state debt. In that year, the General Assembly, under the able
leadership of Alexander H. H. Stuart, of Augusta County, determined
to "embark fully on a system of internal improvement."
Provision was made for supplying the necessary funds
on the pledge of the public credit. By January 1, 1852, the
State had obtained in this manner $13,523,655.87. The Convention
of 1850 greatly stimulated interest in public affairs
and liberalized the government. This resulted in increased
expenditure and a growing debt. From January 1, 1852, to
January 1, 1861, Virginia expended in this way $25,187,301.35,
making a total to that date of $38,710,857.22.[3]

Several million dollars of state bonds were, however,

owned by the state government itself and were held in its Fund
for Internal Improvement and in its Literary Fund. When
a representative General Assembly met in December, 1865,
three questions confronted them. First, what was the actual
amount of debt which the State was under obligation to pay;
second, to what extent was it able to meet its obligations, and,
third, in what manner could it fulfill its duty to its impoverished
citizens, and at the same time be just to its creditors.
"The debt, with its interest, must be paid," said Governor
Peirpoint in his message to that body (December 4, 1865);
"at the same time, we must look to the ability of the people
to pay." The doubt here expressed as to the ability of the
people to pay was troubling the minds of the citizens. The
failure of almost the entire wheat crop added further to general
depression.

As soon as the legislature of 1865 convened, the finance
committee of the two Houses began to study the debt question.
On February 20, 1866, "a bill to provide for funding the interest
on the public debt" was reported from the Committee.
On March 2, 1866, the bill was passed unanimously by both
Houses. It provided for the assumption of the whole debt
of ante-bellum Virginia and of "Restored" Virginia. It further
provided that the bond-holders should be given state
interest-bearing bonds for the interest due them. In order to
quiet disturbing rumors, the General Assembly, which convened
on December 11, 1866, passed a joint resolution that
the Commonwealth did not intend to repudiate any of her
debt.

It was not long after the passage of this resolution that
Congressional Reconstruction settled down like a cloud over
Virginia. The people in "Military District Number 1" were
forced to let the debt slumber while the interest accumulated.

Attention has already been called to Governor Walker's
exaggerated estimate of Virginia's resources, and of the consequent
passage of the Funding Act of March 30, 1871, which

required the annual expenditure for interest of $1,865,450.90,
a burden which could not have been borne at that time.

The attempt of the legislature of 1871-1872 to defeat the
acceptance of interest coupons in lieu of taxes and other dues
to the State, the accumulating deficit in the revenue of the
State, and its inability to make satisfactory arrangements
with the bond-holders were fast increasing dissatisfaction
among tax payers and bond-holders alike. The Commonwealth
was falling behind in her revenues; her creditors and
her public schools were suffering; economic depression had
followed; and the insistence on the part of the bond-holders
that they should be paid added to the discomfort of the
citizens.

The creditors and the world at large had been given reason
to believe from the official statements of Governor Walker
that the resources of Virginia, which had suffered four years
as a battle field, had been but little diminished. He had said
that if the lands of the Commonwealth were fairly assessed,
there would be enough revenue without increasing the rate of
taxation to pay the interest on the public debt and to defray
the current expenses of the state government. After such official
statements, it was only natural that those who were not
in the position to know the real condition of affairs should have
looked upon the defalcation of the payment of interest on
the bonds, and the attempts to defeat the purpose of the
Funding Act as bad faith on the part of the people of Virginia.
As a consequence, British financiers were, not only refusing to
loan money in the State, but also were in some cases advising
others to follow their example. Financial distress resulted.[4]

In his message of March 27, 1874, to the legislature, Governor
Kemper said, "The state credit is prostrate. The best
bonds of Virginia rate lower in the Stock Exchange of London
than those of Egypt, Turkey, or Peru, and our credit ranks

in the grade of such countries as Mexico and San Domingo.
No grosser fallacy can be conceived than the one which claims
that a commonwealth can flourish while its credit is in a state
of prostration or dishonor."

To outward appearances the scars of war were to some
extent healed. Farm buildings, implements, fences, and other
property that had been taken away or destroyed by contending
armies were being replaced. But the increase in such
property was balanced by the debt incurred in procuring it.
The prosperity of Virginia, whose population was almost entirely
rural, depended upon its agriculture. The national
census of 1870 shows that the number of acres in cultivation
within the limits of the present Commonwealth was less by
over two million in 1870 than in 1860; that the number of
pounds of tobacco had been reduced two-thirds; and that the
number of bushels of corn and wheat had been reduced to about
half. Of twenty-four and one-half million acres of land only
about 8,100,000 were improved farm land. This productive
portion had to bear the burden of taxation for the entire State.
Added to the loss of men and capital during the war, there
had been, since its close, bad seasons for crops and a lack
of dependable labor. The labor system had become completely
disorganized and demoralized. The negroes were still enjoying
the novelty of their new condition and could not be
depended upon to remain at work. On the average they were
producing little besides food and clothing for themselves; and
there was no other labor to be had in a large section of
Virginia.[5]

The statement of Governor Walker that the state assessment
of property was too low was erroneous. The national
valuation of all property, real and personal, in Virginia in
1870, was $409,588,133. The state valuation of the same property

was $336,686,433.23 or 82 per cent of the national assessment.
In the United States as a whole, the national valuation
of that year was 32 per cent higher than the state valuation,
and in the six New England commonwealths, together with
New York and Pennsylvania, a contiguous group of prosperous
communities, the aggregate valuation of the respective
state assessments was only 42 per cent of the aggregate
Federal valuation in those states. This was evidence of the
fact that the state assessment in Virginia was relatively very
high.[6]

The Commonwealth was at a lower ebb economically in
1875 than in the hopeful year just after peace was made in
1865. The decrease in realty values had occurred in all the
counties of the State except in seventeen or eighteen, mostly
white counties of the Southwest; and in a large part of the
black belt they decreased over twenty-five per cent.[7]

The State's revenue for the fiscal year ending September
30, 1873, excluding the cost of collection, amounted to
$2,421,945.41. During the year there was collected from the
people in local taxes, excluding the cost of collection,
$2,217,538.49. Thus there was a net aggregate of $4,639,483.90
paid yearly (this being an average paid) in taxes by the people.
Large amounts collected as corporation and Federal taxes
were not included in this sum.[8]

Payment in full that year of the interest on the state debt
assumed by the Funding Act would have necessitated the increase
in the state and local taxes (exclusive of corporation
and Federal taxes) to $5,964,425.77 because the revenues for
that fiscal year had fallen $1,324,941.87 short of the necessary
amount for the support of the government and the payment
of this interest.[9]

In his inaugural address of January 1, 1874, Governor
Kemper voiced the sentiments of the conservative white citizens
when he said, "Obligations to public creditors, binding
the honor and good faith of the Commonwealth, should be
fulfilled to the utmost of her ability in any event and under all
circumstances. No other calamity could inflict greater detriment,
either moral or pecuniary, upon the whole body of the
people than a deliberate breach of public honor." He recommended
the taxation of such subjects as had been exempted
in the past, strict economy, and the elimination of all unnecessary
offices. He hoped that by these means Virginia could
meet her obligations, without further increase in the existing
taxes. These measures, however, could only be taken for the
most part by amending the constitution—a process requiring
at least two years. And there was need of immediate relief.
Further direct taxes on real and personal property would
mean at this time the virtual confiscation of private property.
Some other remedy was necessary. In a message to the legislature
in March, 1874, Governor Kemper said, "Our relief
is in the restoration of confidence and understanding between
the State and her creditors; and in such a settlement of the
public indebtedness as will restore respect in our good faith,
as will command the assent of creditors and secure to them
the regular payment of the utmost interest we are now able to
pay, only postponing such part of our undertaking as our poverty
renders impossible of performance for the present. It is

certainly in our power, if we now enact a just and efficient system
of taxation, and prudently husband our resources to pay,
henceforward, four per centum per annum on the entire debt
intended to be assumed by the Funding Act. It is believed that
an understanding can be had with creditors by which we might
guarantee with certainty the regular and punctual payment,
in semi-annual instalments and at convenient places, of two-thirds
of the accruing interest for the present, giving proper
certificates for the deferred interest and providing for the full
interest, together with all arrearages on interest account, as
soon as our steadily increasing resources shall permit. * * *
"No other obligation can be said to be superior to that which
pledges the honor of the State to public creditors, except the
obligation to preserve the life of the Commonwealth."[18]

In order to compromise with the creditors, and thereby effect
an honorable settlement of the debt question, the Governor
and Treasurer, with the approval of the legislature, called a
meeting of the domestic and foreign bondholders in Richmond
in November, 1874.[19] The meeting bore no immediate
fruit in legislation, but the creditors were made to realize the
real financial condition of the State, which they had never
realized before. Hugh McCulloch was a representative of the
foreign bondholders at the meeting; and it was due, doubtless,
to his influence that they were afterwards less severe in their
criticism of Virginia's attitude towards them.

The members in the General Assembly of 1877 were elected
on the issue of the state debt. The old party lines of Radicals
and Conservatives were broken. As a result, twenty-two independents
found seats in the legislature. This was the beginning
of party demoralization which lasted until 1883. The
elimination of the Republican party as a considerable factor
in state politics, the subsequent relief from the race question
for a time, the grange movement, and the state debt, divided

Frederick W. M. Holliday

Governor 1878-1882

the voters into numerous factions. But most of the independents
and not a few of the others were followers of Mahone
and advocated his plans of "readjustment," or partial repudiation
of the interest on the debt. Mahone had proved unsuccessful
in the extensive railroad interests which he controlled.
He had also failed by a small margin to receive the
nomination for governor in the Democratic convention in
1877. He, therefore, seized upon the idea of readjustment as
a means of bringing himself into power. The general feeling
of discontent, the looseness in party lines, the bad economic
condition of the State, and the certainty of gaining the entire
negro vote if he opposed the conservative whites, made the
time propitious for his plot. Furthermore, he now had a large
following in the General Assembly. The election of Colonel
F. W. M. Holliday, an able and staunch "debt payer," however,
neutralized Mahone's power in the legislature, since the
Readjuster vote was not strong enough to override the executive
veto.[20]

Practically the entire time of the legislature was consumed
by the debt problem. Since this problem affected the expenditures
of the State in a most vital manner, all legislation of
importance depended directly or indirectly upon its settlement.
Governor Holliday in his message of December 4, 1878,
lamented that the debt question had been "taken from the field
of business, where it properly belongs, and dragged into the
arena of politics." But it would have been difficult to have kept
from popular reach a matter which entered into the pocket
books of the people in a very real manner. The first Auditor's
report showed an annual deficit of $854,952.97. At that time,

comparatively few schools in the rural districts had been
opened because the teachers' salaries had not been paid.[21]

Governor Holliday attempted, without success, to borrow
$200,000 from two banks of Richmond to pay the teachers the
money which the State owed them.[22] In his message of December
4, 1878, he described the public school system as the
"greatest benefaction of which we have any record in history."
It was established, he said, "by the approval of every
class, educated and ignorant, rich and poor, as an offering to
the present and rising generation, and as a promise of the future
greatness of the Commonwealth." In spite of his sincere
attachment to the public schools, however, he did not believe
that they should be supported at the expense of the public
credit. School revenue had been diverted by the state government
to aid in meeting interest to her creditors. It was the
belief of the administration that the schools should bear their
part of the burden, and that the good name and credit of the
Commonwealth should be preserved at all costs. However, the
Henkel bill of 1878 was passed providing that seventy-five
per cent of the taxes assessed in each county or city for school
purposes should be retained in that local area for school warrants.
It was furthermore provided that the Auditor should
pay over to the school fund $15,000 every three months on the
amount still due that fund. This law remained a dead letter
until the Readjusters came into complete control of the state
government in 1880. The Grandstaff bill was then passed reserving
ninety per cent of the assessed school taxes to each
local unit and directing the Auditor to pay $25,000 each quarter
on school arrears.

Governor Holliday, at the beginning of his administration,
recommended an increase in taxation. By the Governor's estimate,
it was necessary, in order to meet the situation, that
there should be "no less an increase than from thirty to forty
cents on the hundred dollars of property as at present assessed,

or the finding of other subjects for which of late so
much diligent search has been made, and of which as yet so
few can be found."

On March 4, 1879, the Governor called the legislature to
meet in order to dispose of this grave question, "that angry
controversy may end, and peace and quiet bring that prosperity
which will surely follow and which the people of Virginia
long for so earnestly."[23] His efforts were rewarded; for
after two years of ceaseless and bitter struggle between the
chief executive and the legislature, the McCulloch bill was
passed at the end of the session; received the Governor's approval;
and became a law March 28, 1879.[24]

This act offered the creditors new bonds payable in forty
years with tax receivable coupons and bearing three per cent
interest for ten years. The bonds were free from taxation.
Under the terms offered with these bonds, it was provided that
Virginia should be released definitely from its obligation for
West Virginia's third of the debt.

The new funding scheme was supported by the Council of
Foreign Bondholders of London, and by prominent New York
bankers. Public opinion at home and abroad favored it, and
the support of the bondholders, which was necessary for its
success, seemed assured. The success of the bill depended upon
the ability of the Commonwealth to meet the interest payments
fully and promptly. This was difficult but not impossible from
the point of view of the debt-payers. So difficult was the task
ahead for the State, which was in a most deplorable condition
financially, that William Mahone and John E. Massey, the
Readjuster leaders, found some very capable and honest supporters.
But the leading classes supported the McCulloch

Act.[25] This act not only assured the creditors a satisfactory
adjustment of the debt, but also afforded the State a relief from
its worst fiscal burdens until it would be strong enough to
bear them.

It did not reduce the principal of the debt but it lightened
materially the burden of interest. The annual amount of the
latter to be paid under this act was $1,249,083.45. The act itself
was received by the people with much rejoicing. They believed
that peace had come and that prosperity would follow. "We
congratulate the honest citizens of Virginia on their great
victory," said the Norfolk Virginian.[26] But these honest citizens
reckoned without Mahone and his followers, who had
opposed the passage of the measure. A cloud had already
arisen on the horizon that was, like Reconstruction, soon to
blacken the political heavens and cover the political highways
with mud. There was, moreover, sufficient warning of the
trouble that was brewing. The Richmond Whig, now under
Mahone's control, boasted on April 1, "The Readjusters are
dead, are they? Then look out for a general resurrection in
November next."

The McCulloch Act, like the Funding Act of 1871, provided
for tax-receivable coupons which had been one of the most
objectionable features of the former act. It soon became evident
that the presentation of these coupons for taxes would
greatly burden the finances of the State. Belief also arose
that many of the coupons presented were not genuine.

Soon after the elections of 1877, Mahone had begun to organize
a party to force "readjustment" upon the Commonwealth.
Since the Funding Act of March, 1871, had been upheld
by the hightest state court, and all attempts to prevent the execution
of the law declared unconstitutional, the only recourse
left to Mahone for defeating the act was to fill the offices of
all departments of the state government with his followers,

who would stop at nothing to render the coupons useless as
tax-paying instruments. With this end in view, Mahone called
a convention which met at Richmond in Mozart Hall, February
25 and 26, 1879. All parts of Virginia were represented. There
were present men of every political complexion, liberal Conservatives,
Republicans, Greenbackers, and independents of
various kinds. The negroes had played very little part so
far in the movement. There were only about a dozen in the
convention—those from Halifax and New Kent counties.

Although no positive constructive policy in regard to the
debt was proposed by the convention, there was a great deal
said on the subject during the two days of the meeting. The
Governor and the courts were accused of having betrayed "the
people" into the hands of brokers and bondholders. There
was much talk of the rights of "the people" and the iniquity
of the "rings." Mahone advocated a further lowering of the
interest on the debt to three per cent and the settlement of
the debt in forty-five years. Massey stated that interest which
had accumulated during war and Reconstruction should not be
paid. Finally the convention adopted a platform and an address
to the people enunciating the articles of faith of the
Readjuster party, which was being formed. They were in substance
as follows: That the McCulloch Act was drawn up in
behalf of the brokers, and that it perpetuated the most objectionable
features of the Funding Act and added others; that
Virginia should disown all responsibility for West Virginia's
third of the debt; that, "in any settlement with the State's
creditors, the annual interest of the recognized indebtedness
must be brought within her revenues under the present rate
of taxation; that the capacity of these revenues must be determined
by deducting, therefrom, the necessary expenses of
the government, the apportionment to schools, and reasonable
appropriations for the support of the charitable institutions
of the State;" that any settlement to be final must "rest upon
the sovereignty of the State:" that no settlement could be made
except by the will of the people of the State and subject to the

alteration of the legislature at any time; that "the rate of taxation
is as high as can be borne, and, instead of entering into
any understanding that may necessitate an increase of taxation,
a diminution in public burdens should be provided for."
H. H. Riddleberger was one of the most active advocates of
these principles.

The intentions of the Readjusters were here made plain. A
large part of the interest upon the state debt was to be repudiated,
in spite of former contracts with the bond-holders
and the decisions of the courts on the subject. It was claimed
that the State was bankrupt and could not do otherwise. A
party organization was formed and the permanent chairman
of the convention, Major Volaski Vaden, of New Kent County,
appointed General Mahone chairman of the State Executive
Committee, and, therefore, head of the party.[27]

The leaders of this new party were mostly self-made men.
Some of them were honest in their conviction that circumstances
justified readjustment. Others were more careful of
their own material welfare and political advancement than of
a nice observance of ethical principles. Of such as these latter
was William Mahone. There were some members of the old
aristocracy among the Readjusters, but they were few. Among
the more able and influential Readjusters were James Barbour,
William E. Cameron (editor and mayor of Petersburg),
John S. Wise, Colonel Frank G. Ruffin, and William C.
Pendleton.

Next to Mahone in power, and the most interesting figure
in the Readjuster party, was John E. Massey, then of Albemarle
County. "Parson" Massey, as he was called, was, like
Mahone, a self-made man. He had been respectively teacher,
lawyer, preacher, and farmer. At first a Conservative in politics,
he was led to advocate readjustment through the belief
that the Funding Act was unjust and that the people were not

receiving fair treatment at the hands of those in power at
Richmond. Just as Mahone was the master organizer and intriguer
of the movement, so Massey was the campaigner par
excellence. Possessed of a reputation for piety, a knowledge
of human nature, a cheerful countenance, fluency, and a ready
wit, he went about the State speaking from the platform on
week days and from the pulpit on Sundays. His readiness at
repartee was more effective than logic in discomforting his
opponents, and was especially effective among the unlettered
whites and negroes.[28]

Among the leading Funders (the opponents of the Readjusters)
were, Governor Holliday; John Randolph Tucker,
founder of the law school of Washington and Lee University,
and for a long time professor there; John W. Daniel, later
United States senator and long prominent in Virginia politics;
General W. C. Wickham, a prominent business man and a
conservative Republican; and J. L. M. Curry, a professor in
Richmond College and later Ambassador to Madrid. The
Funders had the support of the Richmond papers, with the
exception of the Whig, which was under Mahone's control.
Furthermore, they represented the great mass of the respectable
and intelligent whites of the State.

The campaign of 1879 was vigorously conducted by both
sides.[29] Neither party bid for the colored votes at first, and
the race question was shunned. In September, however, Massey
made a speech in Petersburg, in which he indicated that
negroes would be welcomed as Readjusters. The Readjusters
spread the rumor among them that the Funders wished to increase
their burdens and that their own party would give them
more rights. Churches and societies were made use of to
spread the rumor and to win the colored vote for the party.[30]

The Funders now tried to divide the colored vote through
some of the negro leaders. They hired negro speakers, established

clubs among the colored people, ran Republican candidates
to split the Readjuster vote, and in six counties at least
they cast their ballots for these candidates, two of whom were
negroes. But these efforts did not succeed. The negroes remained
under the control of their old leaders, who were now
on the side of the Readjusters, and voted against the majority
of the whites just as they had always done.[31] The campaign
ended amid great excitement. The Readjusters with the aid of
their colored allies won both houses of the legislature. They
elected fifty-six out of one hundred delegates, eleven of whom
were negroes; and they elected a majority of Readjuster senators,
two of whom were negroes.[32]

The most absorbing topic before the newly elected General
Assembly of December, 1879, was, of course, the state debt.
Having a majority in both Houses of the legislature, the Readjusters
passed a bill known as the Riddleberger bill,[33] which
embodied the plan of settlement that became the central feature
of the debt controversy from this time until it ceased to be
a political issue. It was vetoed by the Governor as a violation
of the constitution of the United States, of the constitution of
Virginia, and of "the spirit which has ever moved and inspired
the traditions of the Commonwealth." Since legislation of this
kind was unable to escape Governor Holliday's veto, the Readjusters
had to content themselves with filling the state offices
with their men, and with improving their party machinery

in order to insure the election of a Readjuster governor in
1881.

The appointment of county judges in the hundred counties
of the State fell to this legislature. There were comparatively
few reputable lawyers in the Readjuster party. Consequently
in order to get men who would be true to the party, many incompetent
and unscrupulous men were chosen. As a rule the
new appointees did not bring credit upon their party and in
many cases caused much scandal. To make way for these new
men the supreme court judges and about three-fourths of the
county and corporation judges were removed. This tampering
with the judiciary, which was traditionally the most honored
and incorruptible part of the state government, marks the
beginning of the reaction against Mahone which led to his
downfall.[34]

The wholesale removal of officers did not end here. Directors
of the state asylums and educational institutions were
displaced and their positions filled with Readjusters. In like
manner, practically every county and city superintendent of
schools, and even the State Superintendent of Public Instruction,
Dr. Ruffner, were made to give way to men from the
party in power. Dr. Ruffner had not only scrupulously
avoided all political activity himself, but had also warned
the county and city superintendents to keep the schools out
of politics. He realized the power of a state official with representatives
in every locality and he warned the people against
the danger of bringing the schools into partisan politics. He
was replaced by a man lacking fitness for the position.[35]

The Readjusters claimed that this ruthless use of the spoils
system was necessary to rid the government of inefficient
"Bourbons" and to let "the people" have more voice in the
government. But the appointments made in no wise justified

the removals. Mr. Henry Robinson Pollard tells the following
story of an "extremely ignorant but wary partisan"
Readjuster who had been appointed to office. He went to a
Confederate judge to be sworn in as justice of the peace, stating
that he wanted the judge to qualify him. "Come on, Sir,"
said the judge, "I'll swear you, but only God Almighty could
ever qualify you." The same might have been said of scores
of other newly inducted officials of that period.[36]

Mahone was elected to the United States Senate and took
his seat at the time of the special session beginning March 4,
1881. Two years later, H. H. Riddleberger, another prominent
Readjuster, was elected as his colleague. They served until
1887 and 1889, respectively.

The Readjuster party had organized as a faction of the
Democratic party, and Mahone had denied emphatically that
he had any agreement or sympathy with the Republicans. Had
Mahone and his associates declared themselves Republican
sympathizers at first, they would doubtless have lost the support
of most of the native white people who followed them.
No white Virginian of either faction was in the mood to join
the common enemy. The memory of the evil influence of the
Republican party in Virginia affairs in the past could not
be forgotten; and now while they were combating the evils
done by that party, the Republican politicians and newspapers
at the North were prodding the South with harsh criticisms
and pious advice which could not veil the sectionalism and
partizanship back of it all.[37]

Hugh McCulloch truly said a few years later (1887), "It is

outside pressure—the efforts of politicians to retain or acquire
power—that is keeping sectional feeling alive."

In the fall of 1879, Mahone secretly promised the Republican
leaders the support of his party in the presidential election
of the following year. In order to do this, and, at the same
time, keep his Democratic followers in line for the State election
of 1881, Mahone induced his party convention to reject
the proffer of the Funder Democrats to coalesce in national
politics on an equal footing, and to present thereby a solid
front for Hancock and English. As a result both Funders
and Readjusters nominated electors for the Democratic candidates,
although only the Funder Democrats were recognized
by the national Democratic organization as the true Democratic
party in Virginia. The Republicans were encouraged
by this dissension in the Democratic ranks to make a vigorous
campaign in the State. There were now three sets of candidates
in the field. By drawing off votes from the Democratic
party Mahone had accomplished his purpose of aiding the
Republicans while nominally refusing to support them.[38] So
cleverly had this master politician worked his plan that many
Virginians continued to believe that he was as ardent a Democrat
as he still professed to be. Circumstances, however, not
only made him show his true colors, but also gave him great
notoriety in Congress.

When the Federal Senate was about to organize in March,
1881, by the appointment of committees, it consisted of
seventy-six members. Of these, thirty-seven were Republicans
and thirty-seven were Democrats. Of the remaining two, Senator
Davis, an independent from Illinois, had been elected by
Democratic voters and had declared that he would affiliate
with their party. It was evident, therefore, that the vote
of the Readjuster Mahone, who had been elected by Democratic
voters, would decide whether there would be a Democratic
or a Republican organization, since the Republican

president of the Senate could cast a deciding vote in case of
a tie. General Mahone, now forced to take sides openly, cast
in his fortune with the Republicans, as he had already secretly
bargained to do as early as the fall of 1879. This action
was of national importance since it enabled the Republicans
to control the organization of the Senate and the vote in
that body. Riddleberger followed his example in 1883. These
men were quite willing to exchange their votes for special favors
at the hands of the party. They were used as pawns by
the Republicans, and received consideration only so long as
their votes were of special value to them. So engrossed were
they in political affairs in Virginia that they took little interest
in national politics except to cast the deciding vote for the
Republicans when called upon to do so.

Mahone's position in the Senate, however, gave him prestige
and complete control over Federal appointments in Virginia.
He was also in a position now to obtain campaign funds
in the North. He used his increased prestige and power to
strengthen his party and his position in it. The Readjuster
party was rapidly changing into Mahone's party. By working
quietly through his confederates, Mahone laid his plans to
further increase his power. In the fall of 1881, he had the
following pledge sent to each of the candidates for the legislature
for his signature:

"I hereby pledge myself to stand by the Readjuster party
and platform, and to go into caucus with the Readjuster members
of the legislature, and to vote for all measures, nominees,
and candidates to be elected by the legislature that meets in
Richmond, as the caucus may agree upon.

"Given under my hand and seal this . . . . . . . . day of September,
A. D. 1881."[39]

Judge Lybrook received one of these documents enclosed
with the following letter from Fernald, the collector of internal
revenue at Danville, Va.:

William Evan Cameron

Governor 1882-1886

This is an illustration of Mahone's methods.

Since Mahone was the political boss of the State, Readjuster
candidates had little chance for election without his
endorsement; and the returns that fall showed that most of
the candidates elected had signed the pledge.

In the elections of 1881, the Readjusters chose a majority
in both Houses of the General Assembly, and all the high state
officials. The following Readjuster candidates were elected:
for Governor, William E. Cameron, a Readjuster-Democrat;
for Lieutenant-Governor, J. F. Lewis, a Republican; and for
Attorney-General, F. S. Blair, a Greenbacker. Mahone defeated
the nomination for Governor, of Massey (who next
to Mahone was the most powerful man in the party), because
Massey would not submit to his pledges or follow him blindly.[1]
Massey could have thwarted Mahone's schemes had he been
chosen.

Mahone now had every reason to believe that he was
supreme in Virginia politics, since he had control of his party
in the State and the aid of the Federal administration.
President Garfield had given him only negative support, but he
had been assassinated in July, 1881, and President Arthur rendered
him effective aid in the fall campaign by putting an end
to the independent Republican move that was threatening to

separate the Republicans from the Readjusters in Virginia.[2]
Senator Don Cameron and other supporters of the administration
also rendered Mahone and his party much assistance in
the campaign of 1881 by collecting funds, through assessments
and subscriptions. They provided Mahone with means to pay
the poll taxes of the negroes in order that they might vote the
Readjuster ticket.[3] Office-holders throughout the State were
assessed by Mahone for campaign purposes.[4]

In spite of some discontent among the Readjusters with
Mahone and his political methods, they were held together by
the fact that the debt question was still unsettled. In 1882,
the Readjusters had for the first time an opportunity to
"readjust" the state debt according to their original purpose
and unhampered by the Governor's veto. Accordingly, they
passed two acts known as "coupon killers," which virtually
destroyed the tax receivable coupons of the Funding Act of
1871. These acts provided that, if coupons were presented
in payment of taxes, a like amount in cash had to be tendered
at the same time. The coupons were then received for identification
and verification by the collector, who should certify
them to the corporation or county court, which should, in turn,
empanel a jury to decide whether they were genuine or not.
If they were declared to be genuine, the cash received from
the tax-payer should be returned to him and the coupons received
by the treasurer in payment of taxes. The reason given
in the preamble of the act for its existence was that there
were many stolen and counterfeit bonds with coupons attached
in circulation. But there was not sufficient evidence to show
that such strenuous measures were necessary on this account.[5]

These acts virtually destroyed the coupons by making their
acceptance in payment of taxes depend upon such difficulties
and expense; and the probability of their acceptance by the
State was much lessened by the fact that the judges of the
county and corporation courts were now for the most part
Readjusters. The latter were correct in believing that the
remedy given the bondholders was sufficient to prevent the
laws from being unconstitutional as impairing the obligation
of contract. Other "coupon killers" followed from time to
time; and in spite of much litigation the scheme won out.[6]

After the passage of the first two "coupon killers," the
legislature of 1882 adopted with some qualifications, the Riddleberger
Bill, which had been vetoed by Governor Holliday
two years previously.[7] This statute restated the principal of
the debt, placing it at $21,035,377.15. It provided for the issuing
of new bonds payable in fifty years at three per cent interest.
Under this arrangement, the annual interest was reduced
over fifty per cent and the principal was scaled about ten
million dollars.[8] The bonds thus issued were known as "Riddlebergers."
The bonds and coupons were not exempt from
taxation nor were the coupons tax-receivable. Interest on the
bonds, which amounted under this arrangement to $653,888.83,
was to be paid out of any money not otherwise appropriated.

In January, 1882, Mahone and his machine leaders offered
to re-elect Massey Auditor of Public Accounts, but only on
condition that he should submit to caucus rules. He refused
to do this and was deposed accordingly by Mahone, who told
Massey's friends that he had declined to accept the nomination
of the Readjuster caucus.[9] But Massey had not been buried

politically, as further events proved, for now that the aims of
the original Readjusters had been practically accomplished,
he was free to oppose Mahoneism.

There was in the General Assembly of Virginia at this time
a majority of fourteen Readjusters in the House of Delegates,
and a majority of six in the Senate. Mahone left his place in
the Senate at Washington and came to Richmond in order to
formulate such laws for his caucus as would give him supreme
control over state affairs. But there were in the legislature
four Readjuster senators, two former Democrats and two
former Republicans, who had refused to sign the Mahone
caucus pledge, and were, therefore, not bound by the caucus.[10]
These men, with the aid and encouragement of John E. Massey,
voted with the Funders and were thereby able to defeat
Mahone's measures by a majority of one in the Senate. On
account of the importance of the votes of these senators at
this critical time they were known as the "Big Four."[11]

The character of the bills introduced by the caucus and
defeated by the aid of these four Readjusters indicate how
greatly Virginia's welfare was menaced by Mahoneism, which
was the outgrowth of Readjusterism. A bill was introduced by
the caucus providing for the removal of a great many of the
petty officers of the State, such as notaries public, public school
trustees and commissioners in chancery, in order to create
vacancies for Mahone's followers. The appointment of many
of these was to be made in Richmond in order to bring them
under Mahone's central control. There was an attempt to
gerrymander the Congressional districts in such a manner as
to increase the number of representatives in the black counties,
which supported Mahone and the Republican party.
Mahone's paper, the Richmond Whig, openly asserted that
should the bill, which had already passed the House by a large

majority, be accepted by the Senate, Virginia would send eight,
instead of two, administration representatives to Washington.
The Whig regretted that still more could not be sent, and
added, "But it is the best that can be done, and we are content.
* * * Already we have at Washington two senators and
two representatives who stand firmly and cordially by President
Arthur: and under this bill, if passed by the Senate, our
liberal forces will send to Washington six more supporters
of the Federal administration than we now have. To intrench
and further it, the present apportionment bill is avowedly
framed to elect eight congressmen out of ten who shall be
committed and pledged to support President Arthur and his
administration."[12]

Another caucus bill provided for the creation of a board
of railroad commissioners, to be chosen by the Governor. The
board was to have complete supervisory control of the railroads,
and could dismiss employees at its pleasure. The purpose
of this was to bring the railroad systems of the State,
with their numerous employees, under Mahone's control. Another
caucus measure provided that judicial sales should be
made only through a commissioner of sales appointed in each
county by the Governor. Commissioners of sales had always
been appointed by the courts as occasion demanded, and no
fault has been found with that system. Furthermore, a bill
was introduced which provided that the commissioners thus
chosen should select a newspaper in each of their respective
counties and cities which should have the exclusive right to
publish their official notices. In this way, Mahone would secure
both an agent and a subsidized newspaper in each county
and city of the State. These and similar bills designed to further
Mahone's interests were introduced into the legislature
by the Readjuster caucus and failed to pass only through the
aid of the recalcitrant Big Four, whom Mahone tried in vain
to seduce.[13]

Although these measures had been defeated, the Readjusters
passed at this time all the laws that they had promised
their constituents in the beginning. They made laws which
settled the state debt along the lines originally advocated by
their party; passed acts giving apportionment for public
school purposes priority over appropriations for paying the
interest on the public debt, and those for other causes; repealed
the provision in the constitution which made the payment
of poll taxes a requisite for the franchise; and passed
an act to suppress dueling. They had also defeated the
"Bourbon" Funder leaders. The original purposes of the
Readjuster party were, therefore, accomplished. The issue in
the next succeeding campaign was Mahoneism. The Readjusters
now became known as the Mahoneites, and the
Funders, the Anti-Mahoneites, with little change of personnel
in either party. The most substantial element of the Readjuster
party joined the Anti-Mahoneites, and the remainder
of that party now consisted almost entirely of the old elements
of the Radical party of former days; that is, the old alignment
of Radical Republican leaders, drawn from the ranks of Northern
immigrants and the less respectable native white politicians,
with the solid mass of negro voters. Once more the
national Republican party was allied with what was most disreputable
in Virginia politics.

The new alignment in political affairs began to show itself
in the Congressional elections of 1882. But the question of the
constitutionality of the Coupon and Riddleberger Acts had not
been finally disposed of by the Supreme Court of the United
States, and the Funders were still hoping for a verdict against
them. Then, too, it was not an easy matter for some Readjusters
to come back quickly into the party they had just bitterly
opposed. However, their old leader, John E. Massey,
was endorsed by the Democratic State Committee as a candidate

for Congressman-at-large from Virginia. He was opposed
by the Readjuster candidate, John S. Wise, and the
candidate of the few straight-out Republicans in the State,
Rev. John M. Dawson, colored. It was a hard fought and
bitter contest. Once in the heat of a joint debate, Wise, who
had pledged himself not to fight another duel, slapped Massey
in the face. Quick as a flash "Parson" Massey faced him with
the words, "Sir! with combatants you are non-combatant, but
with non-combatants you are combatant!" Wise was elected,
and Readjusters were also chosen from five of the nine Congressional
districts.[14]

Mahone was once more victorious and the Conservative-Anti-Mahoneites
were more than ever determined to crush
him. But the Conservatives now realized that to defeat Mahone,
their own organization must be strengthened and their
platform further liberalized to satisfy the Readjusters who
were joining their ranks.

An opportunity soon presented itself to the Conservatives
to effect a compromise with the moderate Readjusters. The
decision of the Supreme Court in March, 1883, that the act
known as "Coupon Killer No. 1" was constitutional,[15] sustained
the Readjuster party in its debt legislation. The
Funders, who had been fighting to defend the Supreme Court
in its former position on the question, could now accept gracefully
the status quo of the difficult question as here decided
and unite both Funder and Readjuster Conservatives in the
attempt to defeat the corrupt rule of Mahone.

A Democratic state convention met in Lynchburg on July
25, 1883. It was well attended and very enthusiastic. Massey
and other ex-Readjusters were present. The platform that
was adopted advocated a number of liberal reforms, condemned
Mahoneism, the bosses, and the rings, and accepted
the recent settlement of the debt controversy as final.[16] This
platform successfully united the Democratic party; and a new

and complete organization upon an efficient basis gave the
party new life. John S. Barbour, a railroad official of much
ability, was made chairman of the state executive committee
and great power over party affairs was placed in his hands.
For the first time, the Conservative party assumed the name
"Democratic"—an evidence of the abandonment of old
issues.[17]

But the strengthening of the Conservative-Democratic
party did not necessarily mean its success. Mahone had a well
organized party completely under his control. The local, state,
and Federal offices were, for the most part, in the hands of
his followers; and more effective still were the solid ranks of
the negro voters, who followed Mahone's men with child-like
confidence and obedience. With this solid mass of voters behind
him, only a few white followers were necessary to give
Mahone a majority of voters in the State. They could be found
among those who had been estranged from the Democratic
party by the bitterness of the state debt controversy; from
among the unscrupulous or ignorant whites in the black counties;
and from among the whites of the white counties which
were not confronted with the danger of "Africanization" in
local affairs.

The alliance with the blacks, which was the chief element
of Mahone's strength, proved, in the end, to be his undoing.
In order to win and keep the fealty of the colored voters,
Mahone had resorted to tactics which Radical leaders had previously
used in Virginia. The results were the same. Although
his pretended love for the colored people resulted neither in
legislation to benefit them nor in high rewards in the way of
office, the colored people were given some local offices in the
black counties, and they were taught that the great body of

whites, which made up the Democratic party, wished to bring
them once more into bondage. Conditions similar to those
that prevailed during the Reconstruction period existed in
numerous localities throughout the Commonwealth at this time
as the result. Mahone filled the offices of the state, counties,
and cities, with men who were his willing tools. Some were
Northerners of the carpetbag type; others were native whites
of the scalawag tribe. The acts of these officers, and their inflammatory
speeches, threw the credulous negroes into a high
state of excitement, and caused many of them to be exceedingly
disagreeable in their behavior to the whites.

The Democrats hesitated before drawing the color line;
but as the campaign progressed, the attitude of their opponents
induced them to recognize the race question as an
issue that could not be avoided. "I am a Democrat because I
am a white man and a Virginian," said Major John W. Daniel
to an audience in the Southwest.[18] Excitement became more intense
as the election approached, and the relations between
the races grew more strained. The tenseness of feeling gave
way in Danville to a street fight between whites and blacks
that completely turned the scales in behalf of the Democrats
in the elections, which came a few days later throughout Virginia.
This conflict was known as the "Danville Riot."

Danville, a town in southeastern Virginia, had, in 1880, a
population of 7,526, of which 4,397 were colored and 3,129 were
white. By 1883, the percentage of negroes had become even
larger. Yet in this town the whites paid in round numbers
$40,000 in taxes and the negroes paid only $1,200, or $800 less
than the amount appropriated out of the local taxes simply
for the education of the colored children of the town. Prior
to 1882, Danville had no wards, and the government of the
town as a whole was in the hands of the whites. But in 1882,
the Mahoneites had persuaded their legislature to amend its
charter so as to divide the town into three wards, with four
councilmen, and one justice of the peace from each ward. The
division was made in such a way as to secure for the negroes

the power of electing seven out of the twelve members of the
council, all the justices of the peace, and four out of the nine
policemen. One of the negro policemen served also as a health
officer, and another as weighmaster of the public scales and
clerk of the market. Twenty out of the twenty-four stalls of
the market were rented to negroes by the town council. And
the market was in a most dilapidated and filthy condition.
The chairman of the council, Colonel Raulston, carpetbagger
internal revenue collector at Danville, and a tool of General
Mahone's, had openly avowed, upon assuming his office as
chairman, that it was his aim to build up the Radical-negro
party in that locality. The members of the town council were
in his employ. The police courts, with their corrupt judges,
were a farce. The Federal internal revenue office was also
filled with negro employees, or in the language of a revenue
officer of the town, "My office looks [like] Africa, because I have
so many colored people in it."[19]

For over a week before the election, business in Danville
had given place to politics. Incendiary speeches were made
to the negroes by their leaders of both races, and two mass
meetings were held by them just before the riot took place
on November 3. Whites were menaced by armed negroes, and
white women were pushed from the sidewalk.[20] Conditions

were unbearable. The riot, which occurred a few days before
the election, followed an accidental discharge of a pistol during
a dispute between a white man and two negroes. A crowd
gathered but dispersed after several people had been killed.[21]
The Governor sent the militia to restore order, but before it
could arrive the whites had the situation in hand. News of the
riot and the conditions back of it spread rapidly over the
State and united the whites against Mahone as nothing else
could have done.[22] Similar conditions had prevailed in other
localities of the black belt, and other riots were narrowly
averted.

The returns of the elections in November (1883) showed a
complete victory for the forces opposed to Mahone. The newly
elected Assembly contained a Democratic majority of about
two-thirds in each house. And contested elections, together
with the resignation of several Readjusters, soon brought the
Democratic majority to over two-thirds in both houses of
the legislature. There were only a few negroes elected, most
of them from the Fourth Congressional District.[23]

The acts of the General Assembly of 1883-1884 show the
effects of the compromise between the Funder and Readjuster
elements in the Democratic party. The debt question was declared
to be settled. Hugh McCulloch, who was well acquainted
with the situation in Virginia, said after the Readjuster period
had ended, "Had it not been for the colored votes, the
ante-war debt of Virginia would long since have been settled
in a manner satisfactory both to the taxpayers and the holders
of her bonds, and the credit of the State freed from the stain
of repudiation, which now (November, 1887) rests upon it.[24]

The liberal acts passed by the previous legislature concerning
the suffrage, taxation, appropriations for public schools,
and others of like nature, were kept on the statute books; and
the liberal program in regard to the public institutions was
enlarged. But those acts which were the products of Mahoneism
were changed, and the whole political machinery built
up by Mahone, was at once attacked. Among the first resolutions
introduced into the Senate on the first day of the session
was one by Senator Newberry asking that Mahone resign from
the United States Senate. It was charged that he had betrayed
his party in order to get control of the Federal patronage in
Virginia; that he had absented himself from his duties in
Washington for about five months in order to control the legislature
for his own selfish ends; that he had tried persistently
to prejudice the people of other states against those whom
he represented; and that he had not ceased to "array class
against class and race against race, and to influence the passions
and prejudices of one against the other by the most
palpable misrepresentations and unparalleled vituperation."
The resolution was passed in both houses of the Assembly.[25]

The undoing of Mahoneism by the legislature was complete.
The Readjuster Governor's power of appointment was
greatly curtailed in such a way as to give the legislature

the opportunity of depriving Mahone's appointees of office.
There was also further centralization of the appointing power
in the legislature. Thus a great many petty officers throughout
the State, who had been active agents for Mahone, were
removed. Provision was made for keeping local school officials
from engaging in politics. The Readjusters, especially under
Mahone's rule, had found them very useful as local agents
for the party. The charters of the cities with large colored
populations were amended so as to prevent negro-Radical
domination in their affairs such as had existed in Danville
after Mahone's party had changed its form of government.
Congressional districts were reapportioned in favor of the
Democratic party; but gerrymandering was not as obvious in
this as in the former redistricting under Mahone's supervision.
Investigations were made by the Assembly into every phase
of the state government that had been affected by Mahoneism,
and much incompetence, fraud, and evil political practices,
were brought to light. The work of the legislature was thorough
and drastic; but the evil which was undone and the
superior character of the new local and state officials amply
justified these measures.

In April, 1884, the Coalitionist State Convention (as the
Mahone State convention was called) met under General Mahone's
leadership, drew up a platform and instructed its delegates
to the National Republican convention to support
Arthur for president, and adopted the name "Republican" for
the first time. Mahone again posed as the black man's friend.
He conducted his campaign with his usual vigor, but the Democrats
carried the State for Cleveland and elected eight out of
the ten Congressmen. Eighty-five per cent of the total vote
was cast in the election. The total Democratic vote for President
in the State was 145,497; the total Republican vote,
139,356.

In the elections of 1885, there were to be chosen members of
the General Assembly and the Governor. Mahone again made
a desperate effort to win the State. As a compromise with

Fitzhugh Lee

Governor 1886-1890

those who leaned towards the straight-out Republicans, John
S. Wise was nominated for Governor by his party. The Democrats
nominated General Fitzhugh Lee. The removal by President
Cleveland of Republican postmasters and revenue officers,
who had been very active in politics throughout the State,
during the summer of 1885, further weakened Mahone's organization.
And the Democratic organization under the capable
management of Mr. Barbour was rapidly increasing in efficiency.
The campaign was a hard one on both sides. National
interest was felt in it because of the notorious record of General
Mahone in both state and national politics, and the knowledge
that his defeat meant the loss by the Republicans of
two men in the United States Senate, and of a state out of
the solid Republican South. For the first time in twenty years,
prominent Northern Republicans came to Virginia to speak
in behalf of their party candidates. Most prominent of these
were Foraker and John Sherman. Although these men made
"mild and soothing" speeches in Virginia, it was known that
they had "waved the bloody shirt" at home. Their presence,
therefore, aided the Democrats more than it hurt them.[26]

The Democrats were again victorious. Accusations of fraud
were made by both parties, and doubtless there was occasion
for them, but the heavy vote cast by the Republican party,

which was composed largely of negroes, shows that there was
no foundation to the Republican report that there was widespread
"bulldozing" by the Democrats in the election.[27] "The
Democrats," said a telegram from Mahone on hearing the
election returns, "have carried the State and legislative tickets
by unscrupulous use of election machinery, over which they
have absolute control, and which was provided by their past
usurping legislature with this end in view." The Richmond
Dispatch in denying this accusation, said, "What a characteristic
effort to poison the mind of the Northern public! `Unscrupulous'
forsooth! Indeed, does that word come with poor
grace from the leader of the party that has flooded the State
with bogus ballots."[28]

Although the negroes had voted without hindrance in this
election, it was, at this time, that the people of Virginia resolved
to eliminate them from politics regardless of any means
short of violence. They were tired of the danger and friction
which their presence in governmental affairs caused.

The first phase of the Readjuster movement was centered
about the settlement of the state debt. It was able to succeed
because many people, among whom were able and honest men
like Colonel Frank G. Ruffin, W. C. Pendleton, and others, believed
that the life of the Commonwealth depended upon the
"readjustment" of the state debt. Arguments were found and
accepted by them to square the debt settlement with their
consciences. The second phase, Mahoneism, was more important
in Virginia history from a political point of view. It
centered about Mahone, and left its traces on the political life
of the Commonwealth for years to come. The methods introduced
by Mahone to place himself in power were adopted by
his opponents as the only means to defeat him, and men's consciences
became more or less accustomed to such political
methods. The Readjuster movement contributes a painful

chapter to Virginia history. It left only shame and a lowered
political morality. The next fifteen years were marked by an
increase of race friction, and the increased use of these loose
political methods. It was to remedy this unhealthy state of
affairs and to leave neither cause nor excuse for fraud in
politics, that changes were finally made in the fundamental
laws of Virginia. Furthermore, this new alliance of the Republican
party with what was disreputable in Virginia politics
has been a strong factor in keeping the State almost solidly
Democratic.

In 1892, ten years after the Riddleberger bill became a law,
the debt qeustion was still unsettled. Largely on account of
the continual political agitation of this question, funding under
the McCulloch act, and later under the Riddleberger act, soon
ceased. The bondholders continued to press their tax receivable
coupons for payment. Under the able leadership of William
L. Royall, the State was continually being "dragged
before the courts of the Commonwealth and the inferior and
supreme courts of the United States." She was subjected to
harsh criticism; her integrity was questioned; her credit was
ruined; and her progress was impaired. In 1885, and again
in 1887, the legislature of Virginia enacted ingenious statutes
which effectively blocked the payment of coupons for taxes.
Some of this legislation was declared unconstitutional by the
Federal Supreme Court. But enough escaped the hands of the
Supreme Court to enable the State to accomplish its purpose.
The fight continued with bitterness, and suit after suit tested
the validity of the anti-coupon laws. At one time, the Attorney
General of Virginia was summoned before the United States
Circuit Court for violating an injunction, fined five hundred
dollars, and committed to jail until the fine should be paid.
He applied to the Supreme Court for a writ of habeas corpus,
and was discharged from custody. In like manner, Mr. Royall,
the bondholders' attorney, was brought by the same Attorney
General before the state courts for intimidating the grand
juries and was fined one hundred and fifty dollars, committed

to jail until the fine should be paid, and was released by the
Federal Court. Finally, the Supreme Court in rendering a
decision in regard to one of the cases brought before it in 1890
(135 U. S., 662, McGahey v. Virginia) declared:

"It is certainly to be wished that some arrangement may
be adopted which will be satisfactory to all parties concerned
and relieve the courts as well as the Commonwealth of Virginia,
whose name and history recall so many interesting
associations, from all further exhibition of a controversy that
has become a vexation and a regret."[29]

Acting upon this advice, both the bondholders and the state
appointed a commission to bring about a settlement. During
the summer and fall of 1891, these commissioners, after much
discussion, arrived at a compromise known as the "Olcott settlement"
from the chairman of the bondholders' commission,
Mr. F. P. Olcott. By this settlement, adopted in an Act dated
February 20, 1892, the principal of the debt was materially
increased, while the interest rate was further lowered. The
State was authorized to issue new bonds maturing in one
hundred years from July 1, 1891, to the amount of $19,000,000
in exchange for the $28,000,000 of debt which had not been
funded. These new bonds should bear interest at two per
cent for the first ten years, and three per cent for ninety
years. The total principal of the debt (exclusive of bonds held
by the colleges) was placed at $25,081,242.50, an increase of
about three and one-third million dollars over the amount
named in the Riddleberger Bill of 1882. This settlement was
accepted by both sides as satisfactory and final. Since it was
made with the consent of the creditors, and effected a reasonable
compromise, the stain of repudiation was removed from
the good name of Virginia.

At last, after a quarter of a century of bitter struggle, Virginia
had come to a satisfactory agreement with her bondholders.
She did not feel, however, that her duty to them

would be fulfilled until West Virginia had been induced to pay
to them her share of the ante-bellum debt. Soon after Virginia
had ended the fight with her creditors, therefore, she became
their champion in a long battle in the courts with her daughter,
West Virginia.[30]