As time passed, the old question of the state debt loomed more important and more controversial than ever. The problem had two types of backers: one group called the "Readjusters" who believed that the debt should be drastically reduced or practically repudiated; the other group called the "Funders" who believed that Virginia was honor-bound to pay the original debt in full. The "Funders" surprisingly enough consisted of the planter and merchant class men whose financial losses had been the greatest during the war. The "Readjusters" persuaded the Negroes to adhere to their ideas primarily for political reasons. The arguments centered around such issues as: (1) whether the interest on the debt should have been cumulative during the War between the States, (2) whether Governor Walker had greatly over-estimated the potential resources of Virginia in considering the capacity of the ability of the people to pay, (3) whether the payment of a debt primarily because the honor of a state is involved is a major factor in an economic world, (4) whether the Federal government had regarded the State of Virginia as "conquered territory" and hence should assume the ante-bellum debts of this "conquered territory," (5) whether the debt itself should be reduced in all fairness because of the severe war property destruction in Virginia and because one-third of Virginia's entire state area had been reduced by the creation of West Virginia as a separate and permanent state, (6) whether Virginia had been forced by the Federal government to have the status of Military District No. 1 from 1865 to 1870 and hence would the state be held responsible for debts incurred during this period, and (7) whether local state government debts should be paid before payment should be made to outside debtors such as those in New York and London. In 1877 Colonel Frederick W. M. Holliday, the Conservative or "Funder" candidate, defeated General William Mahone, the "Readjuster" candidate for the Governorship.