The Grange advance. [volume] (Red Wing, Minn.) 1873-1877, 1877-05-30
from the Northwestern Chronicle.1
LETTER FROM GEN. SIBLEY,
A Complete and Reliable Statement Of
Facts Connected with the History
of the State Railroad Bonds.
Earnest Appeal from Ono OF tho FOun
ders Of the State ANA Her
First Governor.

Editor of the Northwestern Chronicle:
| have been requested to prepare for your
columns Il statement of the facts connected
with the history of the State railroad bonds,
and have consented to do so, Notwithstanding
the hackneycd nature of the subject, because
of the Importance of the pending amendment
for the settlement of these obligations, and
the further consideration that very many of
your readers arc old friends and acquaintances
Of mine, who cannot be induced to believe
that would wilfully mislead them
1t is well known that the constitutional
amendment which authorized the issue of
these bonds to certain railroad corporations
was adopted in 1858, by the overwhelming ma
jjority, in round numbers, of $4,000 yeas to
1000 nays. The amendment, by that act, be-
came part and parcel of the original constitu-
ton.
Twas the Governor of the State when work
was commenced upon the roads respectively,
and upon me was imposed the duty of issuing
the bonds. Having been opposed to the meas
ure for the loan of the State credit, deeming it
premature and unwise thus to burden Mime
sofa at the very outset of her existence, it was
perhaps natural that the railroad companies
should regard the stringent requirements
which LAID down as condition precedent to
the delivery of the bonds us an evidence on
my part OF an intent to cripple and embarrass
them in their operations; and the criticism to
which was subjected by them eliminated in
an appeal from my ruling by one of the COM
panies to the Supreme Court, and writ of
peremptOry mandamuS was obtained from
that body, directing me to issue the bonds
without insisting, rs had done, upon exclusive
first mortgage bonds of the companies in re-
turn for those 81 the State. mention this to
show that l was governed in my official action
by a determination to enforce a strict compli-
ancc with the law on the part of the compa-
mics, and that in the Judgment of the highest
legal tribunal of the State, had gone even
farther than I was justified in my desire to
guard her interests. Not only was the evil
dence required by the enactment, of the
amount and quality of the work on the roads,
the responsibility of appointing competent en-
Sinecrs to examine and report upon it under
oath, before issuing the bonds, testimony addi-
tional, which was not provided for in the law.
1t should be borne in mind that among the
directors. and corporators in these railroad
companies, were to be numbered many of our
most reputable citizens, who could not be just
~ suspected of any design to take undue ad-
vantage of the State. While disagreed with
them in some points as to the construction of
the amendment, 1 never had reason to doubt
that it was their intention to carry out fairly
their contract with the State.
The total amount of the bonds issued was
81 It's, 600, but before these were all delivered
was requested by the officers of the companies
to visit New York city, and aid them to sell
their bonds, and I conceived it to be my duty
to do SO, that the means might be secured for
the continuance of the work. I remained in
that city for two months at my own expense,
and had nearly consummated an arrangement
with the banking house of Duncan, Sherman
d Co., to place them upon the market at so
cents, when they were deferred from complet-
ing it by the denunciations of the bonds by one
or more newspapers in the State. did not
hesitate to state my belief that the bonds, hav-
ing been legally issued, were good, and would
be protected; and upon my representations
nearly $150,O0O were sold for 80 cents on the
dollar in gold, and am reliably informed that
more exchanged hands at that figure. The
failure of the negotiations was fatal blow to
the companies, as the contractors who had re-
ceived the bonds in payment could not dispose
of them except at a ruinous sacrifice, and were
thus deprived of the means to continue their
work. The great financial disasters of 1857
and 1855 were also upon us and the companies
unable to meet the interest on the bonds they
had received, and gave them due notice that
10 more would be issued.
The State was thus in the same situation
with an individual engaged in building a house
who had obligated himself to pay a certain
sum when the foundation was laid, in negotia-
bic paper, and to continue the payments pa,1
passu as the work progressed, but who found
himself, by the failure of the contractor, with
portion only of the edifce completed. What
would be thought of such man if he refused
to pay his outstanding notes in the hands of
innocent parties, because the contractor had
not finished the building? Who does not know
that such a defence would be of no avail in any
court in Christendom?
But it is asserted that the contractors swim
died the State by receiving more for the work
performed than it was worth. That charge
is very easily refuted. The contractors had no
direct dealing with the State at all, but with
the companies who employed them, so that if
afraud was practiced, by which the State was
sufferer, it could not justly be charged upon
parties who had entered into no engagements
with her. If, therefore, a sWindle was perpe-
trated, it must have been by the companies,
and yet, l have never seen or heard of any al
legations that the members of these corpora
tons had made money out of the transactions.
The facts are as stated, that the work on the
roads was duly performed; that the companies
received the bonds and would doubtless have
continued the construction but for the acts of
our citizens who denounced and deprecated
them to such an extent that they could not be
negotiated. That the State might have pro-
cured the work to be done at a less cost is true;
but who, l ask, is to beld responsible for that
but the people themselves, who adopted and
ratified the constitutional amendment after
full discussion of the question, and after being
warned of the probable results?
The foreclosures of the mortgages or trust
deeds took place; the State was reinstated in
the possession of the franchises and lands
granted to the defaulting companies, and ac-
quired in addition the ownership of the roads
that had been graded; and she was then in a
position to apply all this valuable property to
secure herself against liability for the outstand-
ing bonds. But here again the people were
clamorous for the continuation and completion
Of the railroads; and the Legislature but car
ried out their wishes by turning over the prop
crty 20 new corporations, coupled with the sole
condition that they should construct the rail-
ing not only deprived the State of the resources
she held for meeting her bonded indebtedness,
but it fixed beyond question her responsibility
to the bOndholders. Nevertheless, my belief is