The weekly pioneer and Democrat. [volume] (Saint Paul, Minn. Territory) 1855-1865, 1860-06-01
THE WEEKLY PIONEER AND DEMOCRAT.

proven that as consequence they have been
obliged before, or soon after the completion
OF their roads, to resort to second, and
sometimes to third, mortgage, or have in
CURED large floating debt which has in too
many instances nearly produced their 6nan>
cial ruin.
To avoid the necessity of executing sec.
ond mortgage, or of mourning a floating
debt, the trust deed authorized the issue and
sale of an amount conceived to be ample to
construct and equip the road, provide for
interest and all contingent expenses while
if that amount should prove to be more than
may be required, the power to issue to the
utmost limit need not, and, of course, will
not, be exercised.
The bonds are to be countersigned and
registered by the trustees, and are to be is
sued only as the road is under contract and
in course of construction in sections of forty
miles.
They may be used in payment for lands.
The lands are to be appraised, under oath,
and copies of the lists Of appraisals are to
be furnished to the trustees. They may be
sold by the company partly upon credit, and
in such case, upon payment of portion of
the purchase money and the execution of a
mortgage to the trustees to secure the pay
ment of the balance, complete title may
be given to the purchaser.
The money thus accommodating in the hands
of the trustees, is to be appropriated by
them, first, to the payment of interest upon
the bonds, and, second. to the payment or
retirement from the market of the bonds
themselves. These, in short. are the main
features of the deed. For details you are
referred to the instrument.
1t was prepared with great care, and re-
ceived the attentive consideration of the
trustees, all of whom have occupied high iu-
dicial stations. One of them, lex Chancel.
lor Farnsworth) has had much observation
touching the operation practically of the
land grant Railroad system of the western
States, and other prominent roads of the
country. His experience, combined with
the legal knowledge and elevated character
of himself and his associates, would seem to
warrant the belief that the best interests of
the bond holders, as we'll as of the stock
holders, are abundantly protected so far as
protection rests upon that instrument.
The deed was executed, of course, subject
to the conditions and restrictions contained
in section ten, of article niue, of the State
constitution as amended, authorizing loan
of State credit to the several land grant
Railroad companies.
A difference of opinion arose between the
directors and the Governor of the State, re-
specting the construction of this constitu>
ti0nal amendment. The latter held that the
company was bound to execute an exclusive
first mortgage to secure the payment of
81 100000 of the bonds to be issued to this
company, so as to give the State a priority
of lien upon the lands, franchises and prop
erty of the company over all other holders
of the companys mortgage bonds. The d.
rectors believed that the true intention of
the constitution was to give the State no
other preference over other holders of the
companys bonds, than that secured by a
conveyance to the State of two hundred and
forty sections of land and the net earnings
of the road. In this view the Supreme
Court concurred.
1t has ever been the policy of the direc.
tors of this company to provide against
floating debt, and to have but one class of
creditors, and that class to be bond holders,
secured by one mortgage and having but
one interest, fer were there two classes, the
interests of the one would certainly be hos
tile to the interests of the other, and thus
one class of creditors might be sacrificed en-
tirely, although the property were ample to
secure both, provided their interests were
mutual, as they would be if their securities
stood upon the same footing.
With this policy in view, it was made
known to the legislature that inasmuch as
the bill pending in that body did not con.
template loan of more than twenty thou
sand dollars per mile, this company would
not accept State aid if it were only to be
had upon the terms of first mortgage to
the State, which many members at first
seemed inclined to exact.
The principle involved was fully discussed
and we'll understood, and it was admitted
that the companies could not, with safety,
accept aid upon those conditions. And,
moreover, it was we'll known that it was the
State-the people-that would be involved
in ruin, and not the companies, if these roads
were not speedily constructed. This State
aid was voluntary tender Of credit for the
primary benefit of the creditor. The State
rendered the loan to save herself Three of
the four companies were willing to take it,
and place the State upon the same footing
as other creditors. 1t was understood that
one of the companies, or at least majority
of its directors, did not want it at all. Its in
fluence was used in opposition to the mea-
sure in the legislature and before the people
1t afterwards, however, changed its views,
accepted the tender, and gave the State a
priority of lien, in conformity with the ex-
actions of the Governor, (of which company
he was and continues to be prominent d.
rector
If thus the State is amply secured, it
presents the ignoble spectacle of terdering
her own credit for her Own benefit, and then
exacting through her executive preference
over other creditors, her own citizens many
of them, whose aid must be solicited to be
obtained, and when obtained, goes to swell
still greater the benefit to the State, while
the only benefit they are to receive Is the
payment of interest. Certainly, they are
entitled to equal security for that, and for
the repayment of the principal; and not
having so great inducement to extend their
aid as the State has, which should be the
preferred creditor? Which can best afford
to lose? If either, Justice and sound NOR