This issue involves the debt accumulated for bonds sold to help build railroads  prior to the Civil War.  This debt increased during the war as unpaid interest accumulated., and later rose to over $4300 dollars as the state struggled to repair the railroads and build new ones.  Governor Porter of course felt that it was important to honor our debts or work out a settlement with the bond holders while many wanted to either repudiate the debt or reconstruct it that would favor the state.  In January 1877 Porter asked the State Legislature to create a committee to work out an "honorable” settlement.  The General Assembly instead  asked that the creditors submit a plan of debt adjustment.  A reasonable plan which would have reduced the debt by 40 percent was submitted but the legislatures voted down the plan and instead suggested that the State suspend all further payments of interest with some exceptions.  Porter vetoed the plan which was over-riden and as a result all payments to creditors where stopped.

The issue raged on and on becoming a major issue in the gubernatorial campaign of 1878 and 1882 before a compromise was eventually reached.