A Saga of the New South: Race, Law, and Public Debt in Virginia by Brent Tarter (review)

Virginia's post–Civil War debt controversy is an issue typically mentioned only inasmuch as it converges with the more tantalizing topics of Jim Crow and the solid South. Brent Tarter of the Library of Virginia rescues it from obscurity, however, treating it as an important stand-alone issue that was more about economics and legal arguments than race, class, or partisan politics. Previous histories of late-1800s Virginia have focused on the Readjusters, a biracial coalition that held power from 1879 to 1883, when the so-called Bourbons (conservative Democratic elites) destroyed the party, supposedly because it was simply too black and too Republican. Tarter, however, shows that white supremacy and partisanship were not the only things that mattered to the Bourbons. Upholding the state's good name and creditworthiness mattered to them just as much, if not more, and accordingly they labeled themselves the Funders (of the debt). The Readjusters, by contrast, favored repudiating a large part of the debt in order to pay for public schools and other government services, and they won out with voters. Only after losing to the Readjusters on these economic issues did the Funders/Bourbons turn to race-baiting in order to eliminate their opposition, regain control of the budget, and try to limit the damage to the state's credit.

The story of the Virginia debt controversy is long and complex but fascinating, and Tarter tells it masterfully. It begins in 1822, when the state started selling bonds to finance internal improvements. To help service the debt, the mountainous counties in the northwestern third of the state were required to pay taxes disproportionate to their small population, even though they did not benefit equally from the internal improvements. Then, after the Civil War broke out and Virginia seceded, those counties formed the new state of West Virginia and vowed to pay only their fair share of the debt. Not surprisingly, the two states could not agree on how much a fair share was, so they haggled over it via interstate diplomacy and the federal courts for about a half century.

Complicating this conflict was the Funding Act of 1871, which refinanced Virginia's debt by replacing the old prewar bonds with new ones that gave the owner the right to receive interest payments at six-month intervals by cashing in "coupons" (p. 25). Many bondholders tried to pay their taxes with these coupons, as the law allowed, but the legislature soon repealed the tax-receivable coupons because substituting coupons for cash had created serious budget shortfalls. As a result, through the 1880s numerous court cases were brought by bondholders who felt cheated. Meanwhile, the state's lawmakers wrestled with the interlocking issues of (1) rewriting the law regarding coupons in a way that would withstand judicial scrutiny, (2) refinancing the debt in order to fund public schools and other government services without destroying the state's credit, and (3) trying to determine West Virginia's fair share. The first two issues were addressed with legislation in 1882 and 1892. The fair share issue was finally settled only because the U.S. Supreme Court exerted constitutionally questionable authority in Virginia v. West Virginia (1915) by essentially telling each state what terms it must accept.

The term race in the subtitle is actually something of a tease, because this book is mainly about economics and lawsuits. Tarter should be commended, however, for crafting quite a page-turner out of these pedestrian and pedantic financial and legal topics. It should also be noted that this book offers an expanded version of Tarter's article on the Virginia debt controversy published in the Encyclopedia of Virginia (www.encyclopediavirginia.org).