River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1877-12-06
A WONDERFUL SCHEME.


A New Plan for Paying on Bonds OF
Minnesota md Other states.
From tie New York snes.
The syndicate before referred to in the
columns of the Times,to found a scheme to
fund defaulted state, county, and muni-
eipal bonds, have organized under the
laws OF this state, under the title of the
Funding Association of the United
States, and have elected Hugh McCulloch,
ex-Secretary of the treasury, president;
J. Pierpont Morgan, of Drexel, Morgan &
Co, vice president; Francis Murdoch,
of the First National Bank, secretary, and
Charles Lanier, of Winslow, Lanier &
Co., treasurer. Starting out with the idea
that individual holders of defaulted Sc
curities are naturally powerless, the syn
dictate propose TO collect those parties to-
gether for their joint interest, and, acting
on the power thus gained, compel debtor
states, counties, and towns to offer favor
able terms. 1t is estimated thai the de-
faulted bonds on which the syndicate de-
sign to operate aggregate over $500, 000,-
600, principally OF western and south
ern states, counties, and municipalities.
OF this amount about S300,O00,000 are
county, city, or town debts, and $780,
100000 state debts. On the southern
bonds no interest has been paid since the
war, and on the western bonds none since
the panic. Most of these bonds have
been purchased by their present owners
at not more than from Is to Az per cent.
of their par value. The syndicate claim
that the real value of bond depends
rather on the Legislation which authorizes
its issue than on the paying ability or in
tegrity of the community which issues it.
A law has been drafted, which is to be
submitted to the governors and legisla-
lures of the States where default exists,
compelling the states, counties, aud mu-
inequalities to comply rigidly with the
terms of the several conpacts, and as an
inducement for its adoption the syndi-
cate are to offer to fund all bonds bear
ing 3 or 10 per cent. interest at per cent
for State and 6 for city. The proposed
law provides that the state auditor, with
whom the new bonds are to be registered,
shall annually levy a tax upon the as
sessed value of the property Of the state,
county, or municipality, distinct from
other taxes, and sacredly appropriated for
the payment of the interest on, and the
creating of sinking fund to extinguish
the Indebtedness. Should the proper
collecting officers neglect or refuse to
comply with this provision, the bondhold-
ers are to have the right to apply to any
court in the state, whose duty it shall be
to issue peremptory mandamus to the
derelict official
The law further provides that no in
junction or stay of proceedings shall be
granted by any court or Judge of the
state to prevent or delay the collection of
the tax. The syndicate hopes that the
legislatures of Virginia, North Carolina,
South Carolina, Florida, Alabama, Louis
lana, Mississippi, Arkansas, Kansas,
Texas, Nebraska, Minnesota and Iowa,
to whom this law is to be submitted, will
pass it at once. 1t is believed that all
will eagerly avail themselves of the OPP
portunity Of getting rid of their burdens
and re-establishing their credit, as they
are nearly all well able 10 do. The as
sessed value, which is one-quarter of the
actual value, of the state of Tennessee Is
$1,000 100000; of Arkan sa's, 100000, 900 !;
of the defaulting countiesand municipal
tiles of Kansas, $250,00O,000; of Ne
braska, $200.000,O00; of the city of
New Orleans. 100000, 900, and so on.
The bonded debt of Tennessee is $46,-
100000; of Arkansas, SlO,000,000; of
Kansas, $2i,000,000; of Nebraska $l0,-
coo 600. and of New Orleans, 23,000,-
600. The firms composing the syndicate
are the First National bank, Drexel,
Morgan & Co, Hugh, McCulloch & Co.,
of London, L. Won. Hoffman & Co, and
Winslow, Lanier & Co,