Saint Paul weekly Minnesotian. [volume] (Saint Paul, Minn.) 1858-1859, 1859-01-22

From the New York Tribune Of Jan. II.
! Railroad Bonds OF MINNESOTA.
To tie Editor of the Neso York Tribune: '''-.,' 5'i-
An effort is in progress in this city to nego-
tate the railroad bonds of Minnesota, and for
the better consummation of this object, Gov.
Sibley of that State has been for some days
in the city, and, on leaving, made statement
of the condition Of these bonds, from which
we extract the following: ,"'4 '' -. ',i'
"The conditions upon which loan of State
credit was authorized were these: When the
companies shall have produced to the Govern
or satisfactory evidence, verified by the affi-
davits of their officers, that ten miles of their
roads, respectively, are graded, ready for the
superstructure, the Governor is required to
issue the bonds of the State, to the amount of
500, 900, to the said companies, and so in a
like ratio as the work progresses. And when
the companies shall have furnished like evil
dence that ten miles of their respective roads
are completed, and the cars running thereon,
the Governor shall issue bonds to the amount
of 100000 to such company, until the limit
fixed by the loan amendment is reached
The Governor has ruled that only one-half of
the 100000 can be issued for the grading of
the roads, and the other half when the roads
are completed and the cars running thereon,
and the companies have each and all acaui-
esced in the decision. In other words, $50
miles of railroad, through the richest and most
settled part of the State, must be fully COM
pleted and in operation before the whole of
| the 100000 of her bonds is delivered to
the companies.
The securities exacted by the State for the
companies, are as follows, to-wit:
l. They are required to execute an instru-
ment to the State, pledging the net profits of
the roads for the payment of interest.
2. A conveyance to the State, in trust, of
the first two hundred and forty sections of
land free from prior membranes, which such
| company is or may be authorized to sell in
trust, for the better security of the Treasury
of the State, from loss on said bonds, (which
"shall empower the Governor and Secretary
''of State to make conveyances of title of any
''or all of said lands to purchasers agreeing
with the respective companies therefor" the
proceeds of such sales to " be applied to the
payment of the same, and as a sinking fund
ito meet any future default on the payment
''of interest or principal when due" The
aggregate amount thus transferred to the State
is 314 400 acres.
8. can amount of first mortgage bonds on
the roads, lands and franchises of the re-
spective companies corresponding to the State
bonds issued shall be transferred to the Treas
urer of the State at the time of the issue of
State bonds" The construction. to be given
to the phraseology of this section constituted
the issue made between the Governor and the
H. l. lH, koI
ment, the former insisting that it required a
priority of lien to the bonds of the companies
to be delivered to the State over all others,
and the companies affirming that the true in
depreciation would place the State upon the
same footing with the holders of the first
mortgage bonds 1t is well known that the
Supreme Court decided that the position as
sumed by the companies was the correct one;
but it should borne in mind that this decision
in no case affects the character of the securi-
ties previously described. The Governor,
while he expressed his willingness to submit
to the construction given to the law by the
highest legal tribunal of the State, required of
the companies such change or modification
of their trust deeds as to authorize him, as
the agent of the State, to cause an absolute
foreclosure and sale of all their roads, lands
or franchises, within sixty days after the &C.
currence of any default in the payment of in
terest The interest on the bonds of the COM
panies delivered to the State in accordance
with the requirements of the foregoing section,
being due and payble sixty days in advance
of the semi-annual interest due upon the State
bonds, foreclosure and sale can be made, in
case of default on the part of the companies,
in time to protect the credit of the State bonds
when the interest thereon becomes due, and
precludes the necessity of other legislation for
that purpose. n" at..h s-.
The Governor is empowered, in case of de-
fault on the part of the companies in payment
of interest or principal when due, in his dis
cretion, but in such manner as may be pre-
scribed by law, either "to sell the bonds of
the defaulting companies, or the lands held
Gin trust as above, or may require foreclo-
"sure of the mortgage executed to secure the
"same," as the greater or less gravity of the
default might require. .i'. D"
This statement is, in the main, true but in
asmuch as it leaves out the vital question at
issue in Minnesota, we propose to supply what
the Governor Intentionally, in all probability,
omitted
When this loan was voted on by the people,
it was publicly and constantly proclaimed that
the rights of the yeople were fully and amply
protected, and that they would not be called
upon to pay either interest or principal of the
proposed loan. The law was claimed to be a
perfect one, and that the Companies could not
under its carefully drawn provisions, defraud
the State They understood the law, as the
Governor himself publicly proclaips that he
understood it, and in fact, this is the only
common sense construction that can be placed
upon the language of the law ,.,.... .l
Let us examine this point for a moment
The State was to have the net earnings of the
road to pay interest, but, until the road is
completed and running, there are no earnings.
So the State has no security here The State
| was to have deed of trust of the land, fran
chises, &C., of the several roads but the roads
| got no land, and had no valuable franchises,
| until some portion of the road was completed
The grant donating the land to Minnesota does
not enable the State to avail herself of the
grant until the road is completed. So there is
| no security here. The first mortgage bonds
are the only security which the State has to
protect its advances and to suppose that the
| people of Minnesota did not intend that this
mortgage should be exclusively the first mort
gage, is gross imputation against their
shrewdness and sagacity. To suppose, for
instance, that the $l,25O,OOO which they
agreed to advance to the North Pacific Rail
road Company should be secured by the Com
pany's mortgage Of an equal amount, which
mortgage was to be no higher in character or
security than the $21, 100000, besides which
the Company propose to issue, makes the pro-
position too absurd for argument. This mort
gage is all the security the State has, and this
/ L.