, 1873-07-30
FRAUDULENT BONDS AND INNOCENT
HOLOERSn

In cA6cB whore d btat0 or Mnnlctphl to'crA-
mcnt has boon made nominaly responsible by
tho unlawful and fraudulent actR OF public otii-
clala, and wtouovor it ia clear that public bonds
have boon issued in 1lagrant violation Of tho law,
there ia no moro obligation upon tho dovern-
1nent to redeem these bogus pledges than thore
would bo upon IN individual to pay forged
note issued by ono Of his clerks. As an instance
Of public duty in such caaos, may ho
cited decision OF Judge Dillon, OF tho
United States Circuit Court III Kansas,
relative to municipal bonds issued in violation
Of law question arose in Osago County
whether taxes should bo 1oytod to rneot tho
bonds voted by that county to private manufnc-
tur:1g companies, md it was referred TO the At
torncy- General Of tho stato, who decided TINT
"no official should lovy and no person should
nay such tax" This decision was based upon
ono OF Judge Dillon's, in Which ho declared all
municipal bonds isaued in MD Of purely private
enterprises to DO null and void. The Attorney
General OF tho State added that. in this decis-
ion, "Judge Dillon merely gave voice to the unan-
imous Judgment Of the Bar Of this state." In
nicipal governments of Kansas cannot no charged
With reputation.
OF tho same class with the municipal bonds
described above aro many Of the stnto bonds
isauod hy tho carpot-bag Governments OF South
orn States. It Ia announced that tho stnto
Treasurer of South Carolina has prepared 3
statement showing what proportion OF tho State
bonds arc bogus, and 1t is predicted that tho
State will refuse to pay them. Theroupon the
philadelphia Press Aaya: ivory likely thcHo
woro fraudulently issuod, bnt If repudiatod at
this timo tho loss will certainly fall on innocent
parties" II there III no doubt that tho bonds
wcro fraudnlontly issuod, then 1t is not easy to
| sec how tho circumstance that portion Of them
may be hold by innocent partieH naRos it incum-
bont On tho State to pay obligations which 1t
noyor assumed. Tho " innocent partlcs,' II thcro
be any in this case, have their remedy against
tho guilty parties who swindled them. But the
State, being an innocent party itsolf in case tho
bonds wore fraudulontly issued, cannot reason-
ably bo expected to shoulder the sins aud mako
| good tho thofts Of common swiudlors, because
ua1no. If tic State goos into this Kind Of busi-
neas, 1t will honeoforth bo principally engaged III
robbing. its own people to pay "innocent pat::
ties" tho money out OF which they may bo
Awindlod. Tho fact H. however. that
carpot-bag State bonds Of tho class do
| scribod seldom find thoir way into tho
hands of innocent parties. It il not
reasonable to suppose that many men have in
vested their money logitimatoly in this class Of
securities. The money was advanced upon
theso fraudulent bonds, 1t IL VOL known. by q
oortan clique of Hpecnlatng bankors, who went
into tho game With their oyeB opon, and took .
largo risk with tho prospect Of lurge profit.
They shavod those hords enormously with good
reason to suppose TINT they wore fraudulent
Even 1t thoy were mot acquainted with the dotalls
.1acie evidence Of fraud In tho anxiety OF carpet
| baggora to dispose Of their bonds ut any
| price, Indead, there IL some reason to thnk
TINT tho original purchasers OF theBo securities
bought them in the beliof that tlloir party In
luenco would somo day induos Congress to give
a National guarantee for their payment. A
movement Of this kind, It will DO remembered,
| waa actually developed In tho last conEross.
Tile aame rule that applies to bogus stato and
municipal securities also appllos to fraudulent
bonds mud stocks OF every description, and ea-
peoially to what ia known an watosod stocks.
The ATation olamH tint tho wiping out Of
| lhoHo fictitious and fraudulent issueH ot stock
| would also throw tho bnrtlon Of loss upon
innocent parties, aud talks foeliugly OF
widowa and ORPHANS, Wo decline to bo moved