New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-01-07
TOWN ISSUES OF RAILWAY BONDS.

THR UNITED STATES SUPREME COURT DECLARES
THEIR vALIDITY-OPINIoN OF BANKERs IN RE-
GARD TO THE EFFECT OF THE DECISION.
The recent decision of the United States SUI
preme Court, affirming the validity OF ceEain town
bonds issued aid Of railroad in the State OF Illinois,
is subject Of considerable comment among
waIl-st bankers and brokers. The In
question, they say has all the attributes and
effect OF q test CASE and the decision consequently
covers about every litigation pending likely
TO be brought any State court founded upon The
pudiatioa OF their railroad bonds by tho towns which
issued them The defense raised by the town in Ques
tion that the bonds illegally issued is claimed to
be the very strongest defense that be presented in
any case the kind. and the Supreme Court has de
cared that defense insufficient there remains other
alternative for recussnt towns than ito manfuly meet
their obligations There very few railroads in the
country that have received aid TO extent by
the issue OF bonds by the towns along their lines II
has very generally occurred that the towns have ten
dered such aid very scay in, order to
the passage of railroads through THAR borders When
the road finished however and the interest on the
bonds is demanded, the principal falls due, the
towns frequently experience reaction. and from
enthusiastic tender Of money aid proceed to discussion
OF means for Withholding payments altogether. The
pretense OF fraudulent issue has hitherto been the
strongest and most popular argument for reputation.
courts, before the in question was decided for the
purpose of relieving themselves OF their debts.
il Is not known whether any such cases
have been carried up TO the Supreme Court
before but Il is believed that this Is the first where
such an important principle was laid down. The de-
cisiOn will favOrably affect great many bankers and
bondhoders throughout the country but will not affect
in aDy way the railroads III whose aid the bonds have
been Issued The railroads hoard the bonds. They
cell them al once often low rate because OF the feel
ing of insecurity growing out OF these frequent litca
tons aud while reputation might very seriously affect
the Innocent boudoder who bought the bonds as al IN
yestment or on speculation, would IN no way
relard the building OF the railway or
have an influence against the practical
benefits which town received from the passage OF the
railway Through it, The decision will probably have
influence wherever the building or new railroad
Is proposed teaching authorities that promises
made IN moments of enthusiasm though repenteu after
wards, must be fulfilled and further potical influence
elections enforcing the rulo that the people are
financially responsible for the acts OF their agents Inc
basis OF the decision Is that even irregularities previous
TO the fraudulent Issue make worthless tue bonus
IN the bands OF an Innocent holder, maxim tDat ma
always held good in relation The issue Of COMMERCIAL
paper by business men.
The amount OF town bonds existence Is beyond
computation except by exceedingly complicated aud
process There certainly many millions of
dollars worth u them held In this city again towns OF
this state we'll other States The records uf gi
tures are illed with special acts authorizing towns to
issue bonds in aid OF railroads In Western States
system towns issuing bonds has been more practical
tulii III any other part OF the United States.