The weekly democratic statesman. [volume] (Austin, Tex.) 1871-1883, 1876-06-01


OF Forster, Ludlow & Co., backed, as a let
ter-writer in the Galveston Ners says, "by
other moneyed firms of the country" and
make proposition for the financial relief
Of the State. This firm announces that
Texas must speedily make provision for
the following indebtedness:
sx5sS"e e GO 60 10 per cent bonds due Sept I $50 SO
60O,O0D o. 10 4" July /, 1877.
pension bonds)
ss5ls SO 2 z war; 'nts nHpaid Feb ! 1876
S3l,493 Is on Hclool fond unpaid Feb
s2,9Oi 90 pension c, rllfcztes.
46,947 ~ certificates of d,bt- -r
s2472.sl4 ~
These bankers then proceed to make
their proposition, as follows;
'If your honorable committees will recon-
mend law to be passed by the Fifteenth
Legislature authorizing the issuing of en-
graved bonds of the State of $1,000 each,
to run thirty years from July /, 1876, to
bear interest at the rate of six per cent.
gold per annum, payable January and July
of each year in New York, where the prin-
cipal of said bonds is to be payable, and
said law to provide for two per cent. sink
ing fund for the prompt payment of the
principal when due, we will, upon the pas
sage of said bill and its approval by the
Governor, become the purchasers of the
bonds to the amount of So, 500, 900 at the
rate of ninety-tive cents on the dollar net
cash to the State of Texas, on the following
terms: AS soon as the contract is signed
between the State and our firm we will paw
into the State Treasury the sum of $50, 900
on account of purchase of bonds, and will
be ready to pay into the treasury the bal
ance of the money as fast as it is needed to
take up the maturing bonds and indebted
ness OF the State, provided an equal amount
of bonds is delivered to our New York
house, free OF charge, at ninety-fve cents :;
and provided further, that the money paid
by us to the State shall be used for no
other purpose than the redemption of the
maturing bonds and indebtedness of the
State as hereinbefore specified"
Referring to the suggestion of the Gov
ernor, that six per cent. gold bonds could
be sold for par, the bankers go on to ex-
press a "doubt that large blocks of six per
cent. bonds can be sold at par" They fur
ther urge that the State, by accepting their
proposition, would save commissions, ex-
change aDd risk of depreciation of Texas
securities in the money markets, but at the
same time propose no security against at
least the depreciation.
The proposition of these bankers is not
only an unsafe one, but, as it will
be subsequently shown, is based upon
most unnecessary and even far-fetched fig
ures. The proposition states that when
the contract is signed and $50, 900 is paid
into the Treasury the bankers are abso-
lutely the owners of the So, 500, 600 of bonds
bearing date July 1, 1876, from which date
they shall commence to bear interest. And
might it not be held, and that, too, as
good in law, that the State has no
bonds, or any part of them, after
they have thus become the prop
erty of the bankers. Would they not at
any time, even two years after date, carry
with them all coupons representing interest
from the date of issuance2 And then, too,
no sum of money is to be placed on deposit
in the Treasury as margin for security in
case of bad management on the part of the
self-proposed financial agents of the State.
We are firm in the belief that the Gov
ernor is right in regard to the gold bonds
bringing par; in fact, they should sell
above par, and we will state as piece of
news to these bankers that a leading finan-
cier and moneyed man of Texas, now in
this city, stutes that he will take Texas
currency bonds at the very same rate at
which they propose to take gold bonds.
The fact is, these gold bonds, which are
asked for at 95 cents, can be sold readily
at handsome premium, and it is conf
IDENTIFY believed that the finance committees
will mature plans, by which, if bonds are
to be sold (and it is doubtful if such con-
tingency will arise), they will be disposed
of at a premium. Mr.. Kopperl, chairman
of the House Finance Committee, is conf
dent of the States financial rcpose, under
plans that he is maturing, and the conse-
quence is that all in this proposition bears
very weak front just at this time.
The proposition of Forster, Ludlow &
Co. assumes that the Fifteenth Legislature
must make provision for some two and a
half millions dollars of debt, or, in ex-
act figures, 81, 472, 214.s4. By reference to
their schedule of debt, which we take as
correct, it will be seen that the duty OF pro-
viding for the pension bonds does not, of
necessity, belong to the Fifteenth Legis-
lature. The time at which these bonds may
be redeemed does not expire until July
1, 1879, and long before this day comes the
Sixteenth Legislature will have held
its session. Consequently, with but wipe
of the pencil, we will do away with the
pension bonds and certificates, amounting
in the aggregate to 81, 1913, ,261, which
leaves only 81, SIS, 95S. "a to be provided for,
if at all, by the Fifteenth Legislature. By
provision of the new Constitution the United
States bonds, belonging to the permanent
school fund now in the State Treasury, and
fths proceeds arising from the same, can be
invested in Texas bonds. (See Art. Z, Sec.
~ These bonds and the cash belonging to
the same fund now in the Treasury is as
follows:
L. s 5 and s per cent bonds $4,000
worth a. low estimate 10 per cent pre-
MUM. .-....-.- .tSto,u0 %
Cash- S4VVo W
Total fund. ESQ zoe 90
By selling to the permanent school fund
this last named amount for six per cent
State bonds, 1t viii be discovered that
the State viii have to provide only some