Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1875-12-16
MAJORITY REPORT.

To the Honorable General Council:
We find from the testimony adduced
before us, and which we herewith SUBJ
NIT, that in May, June, July, August,
September and October, 1870, during
Mayor JOhnsOn's first term of Office,
VIM. B. GreenIaw, VIM. N. Harrington
and Mr.. Johnson, purchased in New
York city about S3IO, 900 of the bonds
of the city then in the market. The
bonds were purchased at from dfty-One
10 fffy-eight cents, then. the market
price. The bonds, or most of them, were
Rfterward sold at q profit, the first sale
being made about February, 1871, of hf-
ty bonds at sixty cents, and the last
about February, 1872. The amount OF
profits realized by Mr.. Greenlaw, MIR.
Harrington and Mr.. johnson, was about
$4,000 each. Mr.. Greenlaw first prOpOs-
ed the purchase of the bonds In April,
1870. to MIR. Harrington, and by agree
ment between them they proposed to
MIR. Johnson to join them in il, he agree
ing to nav his portion of the loss, If any
was sustained.
Mr.. johnson did not purchase, or give or
ders to purchase any of the bonds, but the
purchases were all made on orders of Mr.
Harrington, or Mr.. Greenlaw. The account
was kept in the name OF Mr.. Greenlaw. No
testimony has been adduced before us to show
that Mr. johnson furnished Information or
any kind of assistance in the purchase or sale
of the bonds; but, on the contrary, the testi-
mony is that Mr.. johnson never gave any ad-
vice or direction in tae transaction. Mr..
johnson arranged with the Union and Plan
ters bank to pay the interest on the bonds fall
ing due January l, 1871, amounting to about
$4,000. The bank was the city's depository
The city had on hand $40, 900 or $4,000 to meet
the interest. The bank agreed to loan Mr..
johnson, for the city, the balance required,
about $50 coo, until sufficient interest on taxes
were collected to repay them. The taxes were
paid so promptly that Mr.. Johnson was able
to repay the bank in thirty or forty
days. In this transaction, your committee
are satisfied that Mr.. johnson acted for the
best interests of the city, both pecunla-
rily and otherwise. II Mr.. johnson had not
borrowed the $50, 600 at ten per cent, the city
would have to pay interest on $4,000, at six
per cent In other words, Mr.. johnson had
to pay S4S3 interest on this loan, while If he
had not made it, the interest, at six per cent,
for the same length of time on the coupons
he paid, would be SlO62 80. This wsuld make
a clear loss to the city of $3.50 60, besides the
injury 1t would be to the eity's credit to allow
the coupons to remain overdue for nearly two
months. These are the facts, developed in
connection with the payment Of the January,
1871, interest, and they prove conclusively
that Mr.. Johnson acted for the welfare and
best interests of the city.
In regard to the July, 1871, interest, your
committee find that Mr.. Johnson made an
arrangement with the said Union and Plant
ers bank to pay the interest then falling due.
The arrangement was that the Union and
Planters bank were to buy the coupons at par
and hold them as collateral until 1t was re-
imbursed, Besides the coupons there were
fifty thousand dollars of the notes of the city
issued under an ordinance passed in June,
1871, placed in possession of the bank as COL
lateral also. The bank was at liberty to sell
the coupons within reasonable time by
giving the city thirty days notice. The rate
OF interest charged the city by the bank for
the amount advanced on this occasion was
ten per cent. From statement m ade by the
comptroller we find that the interest tax col
lected up to July l, 1871, was sufficient to pay
the interest then falling due, but the general
fund had been borrowing from the interest
fund money to pay the police, fire, hospital
and improvement departments. The money
therefore apparently borrowed to pay the
July, 1871, interest, was really borrowed to
enable the general fund to make up its deficit
TO the interest fund.
The special tax levied 10 pay the interest
cannot lawfully be appropriated to any other
object. We conceive 1t was the duty of Mr..
Johnson to pay the interest as 1t was due, in
January and July, 1871, the interest tax col
Iected being sufficient therefor except in the
case of the January interest, and that he act
ed properly in nego tiating the loans 10 enable
him to do II.
No testimony has been adduced showing
that Mr.. johnson made the arrangements for
the payment of the interest in January, 1871,
or the arrangement for the payment OF the
interest in July, lS7l for the purpose OF appIe-
ciattng the bonds held by Mr.. GreenIaw, Mr..
Harrington and himself, and we find nothing
in the testimony to authorize any such INFER
enc%
The bonds of-the city did appreciate after
the election Of Mr.. Johnson and the pubnca-
ton Of the financial policy he determined to
pursue. But, in ouS opinion, this was the re-
suit of the. legislation of 1869 in our new city
charter, which prohibits the Issuance OF scrip
or city warrants, and requires the payment Of
taxes accruing after 1870, in current money,
and the confidence felt BY the business COM
munity in the success Of Mr.. Johnson's ad-
ministration.
We find no State law, nor any city ordi-
nance, prohibiting an officer OF the city from
purchasing or selling the bonds OF the city al
ready in the market as public securities, and
are unable TO see that there is any legal or
moral impropriety in his doing So OF course,
# any officer uses his ONCE directly or indi-
rectIy for the purpose CT affecting the value of
city bonds, and thereby making a profit, his
conduct is reprehensible, and should be pun
ished in II 2verest II amer. But, as already
remarked nave noe r ..-'1. Nr John