The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-06-15
THOSE CHATTANOOGA BONDS.

The Funding Board acted very
properly and emphatically in rejecting
the application of Mr.. r. Ames for the
funding Of the $4,000, 900 OF bonds issued
to the Chattanooga Railroad Company.
These bonds were issued under an act
Of the Legislature passed during War
moths administration, and which au-
thorized the Governor to issue that
amount In payment of stock in the
company on the prolongation Of the
road from Vermilionvile to Shreveport.
There had been previous contract
with the State by which this amount
was to be issued to the company, to be
secured as second mortgage on the
road at the rate of $23,o 900 per mile. But
the company wanted the bonds In adj
vance of the execution of the work and
without encumbering the road with this
mortgage.
SO this act was concocted. substi-
tuting stock for the second mortgage,
and under 1t the bonds were issued by
Warmoth. The legality of this issue
funding act went into operation, and
was referred to the late Supreme Court,
which decided that the conditions upon
which the bonds were to be issued had
never been executed by the company;
that not mile of the road had ever
have always remained in the hands of
the company, were illegal, null and
void. The Legislature also passed an
act forbidding the funding of these
bonds, and in every other form in which
the question could be brought up they
have been declared to have been
issued in fraud, and to be void and
OF no sort of legal value or effect.
Mr.. Ames made his application to the
Funding Board with view, it is in
timated, Of making a new case for the
courts. Nobody objects to his incur
ring the expense Of further litigation,
but one thing is very certain. and that
is that all the skill and ingenuity his
attorneys may bring to bear will not
avail to secure reversal of the former
decision OF the Supreme Court on this
palpably fraudulent issue of bonds.
The company, after receiving several
millions from the State for q railroad
which has never been built more than
seventy miles, sought to impose upon
taxpayers this additional two and half
millions for a projected road which
they never had the slightest idea
of constructing. The action Of the
Funding Board on Wednesday in re-
jecting the application Of the holders
of these bonds will give the quietus to
this utterly unfounded and fraudulent
claim.
2Speculators have too long held up
this issue as a menace of the increase
Of the consolidated debt beyond the es-
innate which has been made Of it by
those most conversant with the fnan-
cial condition of the State. With this ad-
dition it was apprehended that the issue
of consols would reach within two or
three millions of the constitutional
limit Of fifteen millions. But now that
the rejection Of these bonds is placed
beyond all doubt and the impossibility
of the funding of any portion Of them
made certainty, it is believed that the
issue of consols will not exceed eleven
millions, IL it should indeed reach that
amount. The effect Of this reduction,
with the guarantees secured by the con-
stitution, by the acts Of the Legislature,
by the prudent and careful action of
our Funding Board, and the honest col
lection and application Of the taxes,
will be to place these bonds in the
front rank Of solid securities for safe
and permanent investment.