The Portland daily press., 1877-06-16
PORTLAND SATURDAY MORNING. JUNE I6 1877.
RepudiatiOn In Minnesota.


committed itself to reputation of portion
of its Indebtedness, having voted on Tuesday
by small majority not to pay the Minnesota
State Railroad bonds. This dishonest act
will injure the young state for years to
come, and so cripple its credit as to seriously
impede the prosecution of enterprises requir-
ing large capital.
The question voted upon Tuesday was a
proposed constitutional amendment devoting
the proceeds of five hundred thousand acres
of Internal Improvement Land to the pay
ment of the State Railroad bonds How
these bonds came into existence was in this
manner: In 1857 Congress granted 100000
acres of public land to the Territory of Min
nesota to aid in the construction of railroads.
These lands were ceded by the Legislature to
various railroad companies, but the panic of
that year made it impossible to build rail-
roads with lands. Next year, in obedience
to the popular will, constitutional amend
ment authorizing the issue of State bonds to
aid the companies in constructing their roads
was submitted to the people. This amend
ment was ratified April Is, 1858, by a vote of
25,O23 to 6,733. 1t authorized the
Legislature to issue S5,000,00O of
State bonds, and the railroads were
required to execute mortgages on the
land grants in return for the state bonds.
Minnesota became state on May II, 1858,
and in December of the same year Gov.
Henry H. Sibley began to issue the bonds.
Before doing so he sought to require the rail-
road companies to execute exclusive first
mortgage bonds, but the Supreme Court of
the state ordered him, by mandamus, to issue
the bonds, which he did to the amount of $2,-
275,000. The railroad companies paid these
bonds to contractors, and succeeded in 1855
SO in grading about 250 miles of road-bed.
Owing to the effects of the panic of 1857,
however, they were unable. to sell their own
bonds or convert the state bonds into money.
The contractors stopped work, and in 1860
the Legislature prohibited the further issue of
bonds. The mortgages on the lands were
foreclosed, and the state, by purchasing the
lands, franchises and graded roadways, re-
covered all the property which had been mort
gagged to secure its bonds. These lands were
afterward given to new, railroad companies,
and the roads were finally completed The
holders of the state bonds sought to recover
the cost of grading from the new companies,
but the United States Supreme Court decided
that the state was the primary debtor, and
liable on its bonds. The state, however,
practically repudiated the debt, having up to
the present time paid no interest upon the
bonds. These bonds, principal and interest
(at per cent? now amount to about $7,OOO,-
600. They will fully mature within six
years, when the total sum due will be about
$10,0O0,000.
Many unsuccessful attempts have been
made by the holders of these bonds to effect
some arrangement for their payment and to
collect tho interest overdue. But tho people
of Minnesota majority Of them, for large
minority have always been strongly in favor
of discharging the obligations of the state
have evinced no disposition to pay the debt,
but on the contrary have shown a strong re-
pugnance to accepting any proposition which
required them to be honest. Finally the
bondholders induced the last Legislature to
make arrangements for the payment of one
half the Indebtedness on the mis-named secu-
rites. They proposed to takenew six per cent.
bonds running thirty years, at rate of fifty
cents on the dollar of the old indebtedness,
and to surrender the old bonds. The total
issue Of the new bonds would amount to
$3,500,OOO. This is the proposition which
the state has just rejected. The large towns
generally voted in favor of the amendment,
the country districts against it-a sad COM
mentary on the boasted honesty of the sturdy
farmer. Hereafter the man who has money
to lend or occupation to seek will do wisely
to avoid M!nnesota-unless he has a desire to
be swindled.