The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1871-08-10
THE BLUE RIDGE SCHEME,
Z Il NUT FOR EHEpUs1Ic TO CRACK.

THE BLUE RIDGE SCHEME,
Z Il NUT FOR EHEpUsLIc TO CRACK
To the Executive Committee OF the Tax
payers Convention of the State OF
South Carolina.
GENTLEMEN-Under the Instructions OF tne
Taxpayers Convention, we have examined
the legislation in relation to the Blue Ridge
Railroad Company, and the action OF the
company under those acts. aud beg leave to
report:
That, in 1854, (l2 Stat, 373,) the State SUBJ
scribed one million of dollars to the company,
and authorized the Governor to issue State
bonds to pay such subscription.
The State also authorized the comptroller.
general, by the sane act, to endorse bonds OF
amount of one million of dollars. The en-
dorsement to be void II the bonds were sold
or issued below the par value. Other condl-
were also attached to the endorsement
by the State. These endorsed bonds were to
30 secured BY q mortgage OF the property OF
the company In South Carolina, Georgia, Nortn
Carolina and Tennessee.
It appears that the State never did endorse
any bonds under, the act of 1854. but the com.
pany issued Its bonds to about $3.50 600, and
secured them, by a mortgage, to Henry Gour-
din, James Rose and Mitchell King, of all OF
its property in the several States.
In 1865 the State, referring to the above pro-
visions Of the act of 1854, and reciting (erro-
neously, however) that the Blue Ridge Com
pany had executed the mortgage required oy
the act of 1854, and that no bonds had been
endorsed by the State, and that the conditions
i 81 h,, 2 fhn oOf nf
1854 shave become impossible and injudcious
while the necessity of the completion of the
road has become more urgent" passed an act
authorizing the mptroller-general, without
reference to the said provisions and condi-
TONS" to endorse bonds to the amount Of one
million. No security was provided for the en-.
-dorsement by the State. (See sec. OF act OF
1868, IA stat. 25.)
The second section Of the act authorized the
-comptroller-g general to endorse bonds OF the
Blue kidge Company. "to an additional amount
not exceeding three Million" and that as
soou as the comptrcller-gen shall have
made any such endorsement on any such con-
tract the whole estate, property and funds In
the States of South Carolina. Georgia, North
Carolina and Tennessee, which the said COM
pany may then possess or shall afterwards &C
.quire. shall henceforth stand pledged and
mortgaged to the State without any further act
or deed on the part Of the company"
The section authorizing the endorsement OF
the three million, provided that the bonds
'sshall not be used unless upon the express
condition that upon application to Congress,
or to private capitalists, the amount Of three
millions In currency, or 80 much OF that sum
as may be necessary, shall be furnished In ex-
$hange or upon the security OF said bonds" (.
The object of the provlso was to prevent the
sale or pledge OF the bonds at less than par.
It was, in fact, continuation Of the proviso
in the act of 1854 that the endorsement was to
be void If the bonds were sold or issued below
their par value.
Before the endorsement of the bonds by the
State (as We are informed) the Blue Ridge
Company executed to Messrs. Henry Gourdin,
q. Ciews and G. 8. Cameron mortgage Of all
Georgia, North Carolina and Tennessee, to
secure the four million Of bonds authorized by
the act Of 1868 This mortgage was executed
and recorded before the bonds were signed by
the company or endorsed by the State.
From this review of the legislation, and OF
j. bonds authorized and liens created were as
follows:
LIST. The mortgage to Gourdln, Rose and
King, to secure about $3.50, 900 OF bonds Of the
company unendorsed
2d: One million Of endorsed bonds author;
by any legislation : s3oo, 600 Of these bonds
were to be applied ssto the redemption Of the
present bonded debt Of the company" deslg-
mated above as first lien.
Sd. Three million of endorsed bonds author
lied by the act Of 1865, secured by q statutory
lien on the property of the company 10 South
Carolina, Georgia, North Carolina and Tennes-
see.
4th. The mortgage. by the company to
Messrs. Gourdin, Clews and Cameron. to se.
cure the entire tour million issued under the
act of 1868.
Whether the statutory lien or the mortgage
by the company Is to be regarded as the prior
appear to us material. The object of both is
to secure the application of the property of the
company to the payment Of the bonds, and
the mortgage accompllshes this much more
effec.ually than the statutory lien. The mort
gage covers the entire four millions of bonds,
and embraces all the property OF the company
wherever situated, while the statutory lien
only extends to the property within the State,
and only covers three millions of the bonds.
In any light In which it can be regarded, it
appears to US that the security to the State
afforded by the mortgage Is better than that OF
the statutory lien.
The mortgage and statutory liens secured
of the bonds, and the act Of the Legislature
provided that the bonds should not be used at
less than par. If the legislative provisions had
been strictly adhered to, the State would
have been comparatively safe, but the proVls-
ions of the act were not compiled with Sy the
Blue Ridge Company. President Harrison In
forms us that s's600000 Of the bonds were
placed In the hands Of 81. q. Kfmpton In DeceIn-
Der, 1869, or January, 1870, as collateral for
loans made and to be made to the company,
Without reference TO any value or rate fixed
to the bonds, and that under this arrangement
5000, 900 have been borrowed by the CON-
When the only provision which the Legisla-
ture had enacted for the security OF the State
was thus easily violated, the effort to procure
It's repeal seems awork of supererogation.
Some doubts as to the legality of the action of
the company must, however, have been enter.
tanned BY the lenders, for the Blue Ridge
Company was advised that the bonds could
not be negotiated II the provision of the sec
-ord section OF the act of 1868 was adhered to.
Application was therefore made to the Legis.
latlre, and in 1871 an act was passed entitled
stAn act to promote the consolidation OF the
Greenville and Columbia Railroad Company
and the Blue Ride Railroad Company"
The first three sections give large powers
and privileges to the Greenville and Columbia
Railroad Company. The fourth section pro-
Tides "that In view Of the consolidation of the
.Greenvllle and Columbia Railroad Company
and the Blue Ridge Railroad Company" the
issue OF the bonds authorized by the act oil
1868, the endorsement by the comptroller
general, and the execution of the mortgage by
the Blue Ridge Company to Messrs. Gourdin,
CleWs and Cameron, are ratified and confirmed,
and the mortgage declared to be lien prior
to the statutory lien.
The sixth section repeals the provision,