The New York herald., 1877-10-28
Proposition for Funding the Neglected
Bonds at Reduced Interest.

tofcSs w WHiOH tuu5 feMatbeu unpaid ag-
regated $500, 100000 or this the county,
city and town debts exceeded $500 0oo while the
bonds OF the States amounted 70, nearly $780, ooo
Now II was known, said Mr.. McKennon, that the
value OF bona depended rather on the legislation
which authorized its issue than the paying ability
or integrity Of the community which issued L. The
order therefore, 10 secure this class OF bondhoders
and to enforce tho absolute and speedy payment Of
the interest," and, ultimately Of tho capital ofths In
dcbtednesa system Of legislation mad been
matured whose adoption by the Legislatures or
several Southern and Eastern States would accom-
plish tho end In view. To SECURE this legislation
the Funding Association OF the United States' had
been formed and would be incorporated under tho
general law OF this Siaio The firms composing the
association were the First National Bank, which was
interested through ono Of It's leading directors Mr.
Francis Q. French, Hugh McCuloch 4 Co., OF London
L. Van Hoffman, Co. Drexe Morgan 4 Co., and
winsow, Lan,or 4 Co. There were others OF equally
nigh standing, whose names Mr.. McKinnon did not
care to mention just now Mr.. McCuliock was to bo
president and Mr.. Holmes, formerly OF The FIRST
National Bank, the secretary Of the association
HOW PAYMENT BE sRcuREn
Mr.. McKinn0n now detailed his plan for securing
the payment Of the interest on these $500 0OO 600
worth Of bonds (some OF which were sold at IL per
cent 10 their present owners) He had drafted law
which he should submit to the Governors and Lcgisa.
lures of tho several States, and which Il was hoped
they would adopt This law would compel these
States counties and municipalities TO comply rigidy
with the terms Of their compact, and nducement
for adoption the syndicate would offor to nnd all
these bonds bearing eight per interest at
four ana per cent-she state bonds at four tho
others at six. II would provide that the Auditor or
the State with whom the bonds were to be registered
should annually levy a the scd
property OF tho State Tor county and muncl-
palliyl which shall be collected through tho
proper officers OF tho state, county or
municipality distinctly from al other taxes and
.'sacrcdly approDrated for the payment Of the inter-
est ana the raising OF sinking fund Tor extnguishing
the Indebtedness Should any such officer neglect or re-
fuse collect such then the bondh shall have
me rgns Apply any cou.. Inc state whose duty
cai compelling him 70 collect u. The law further
more provided that no Injunction or stay OF proceed
ngs shall be granted by any court or judge OF the state
tc prevent delay thc collection Of the Tax Mr..
hcKinnon siid that this enactment could not now be
given In iull because Il might yet be subjected TO
the scrutiny OF Mr.. judah =. Benjamin. Of London,
and 8. L. Barlow Of this CITY, who both agreed that
IL would tho desired eId II adopted by the
crai States These States which would be asked to
pass we're Virginia. North Carolina. south Carolina
Florida, Alabama, Louisiana, Mssissipp,s Arkansas
Kansas, Texas Nebraska, Minnesota and Iowa.
NOT PnILAkrHRoPiCf ExrRRPRisK
-Four years ago, Mr.. ncknnon said, he had formed
respondcnce with The Governors OF Virginia Arkansas
and Louisiana, who were favorable the passage OF
the law The only reason why y was not then passed
that tho company was weak, aud confidence
was placed In the then hackers of the project.
Out OF the $500, 900, 600 worth or bonds not
the remainder being in Europe. When asked
how large proportion OF tho bonds was held by the
incorporators he smiled and frankly said, "A very
largo amount but OF course, you understand that
don't claim this to bo charitable or phianthropic
stat eincnt OF what Mr.. McKinnon meant 10 do this
winter in the matter. He would first begin with tho
State Of Tennessee with its 900 bonds Arkan
county and mupicpa), Nebraska, $40 oO0 900 county
ana municipalL and wind up lne season win
municipal debt when asked what reasons se
had for hoping that the states would impose
this burden upon themselves by their own cgis-
he replied tharthey could well afford TO do It the
assessed value Of the State OF Tennessee which
OF Arkansas $500 ooo ooo OF tho counties and munc
ipaties OF Kansas, $3.50 1000, 900; Of Nebraska,
500 600, 900, and OF the CITY OF New Orleans,
5000 100000. He also dwelt upon the Importance
which those States would attach 10 the practcabiliiy
OF thus restoring ther credit
Mr.. French, director oil the First National Bank,
being called upon In relation TO the matter expressed
great astonshment that tho HERALD should have been
informed by the principal promoter OF any Of the
facts
you don't want to see the baby before it's born ?"
he asked energeucally. "We have not yet re-
ceved word from Albany whether our application TO
incorporate this association has beon granted. You
must not publish anything about iIo
But, Mr. French, Is not Mr.. hcknnoD. who has ro-
qucsted the publication in the HERALD, your legal
representative ~
s,wel he won't DO any longer II he commits such
indiscretions," Mr.. French wrathfully replied and
rallyipg an attendant darkey he babe him ny lorth
wlth TO that gentleman with the message that II any
of the facts wero now published one or two Of tho
signers OF The application would certainly withdraw.
sir. French admitted that tho firms quoted by Nc
Kinnon had taken up the project, but denied that
there any Others as the 1--WE firms above named
meant TO keep Il all to themselves Ho thought that
the southern States would be glad to restore their
credit by having their bonds, which were sold all the
way from one and hall TO iorty-three cents on the
dollar funded, Mt four per cent
INTERVIEW WITH .x-sECRgTAKY MCCULLOUGH
representative from the herald went to tho
Gramercy Park Hotel, wnere cxSccretary Mccullough
and family stopping, aud Mr. Mccullough IN reply
to the questions propounded to hun, sad, in sub
stance, that Tor some time back, both IN Europe and
America, the creditors OF American states counties
and cities whose bonds were in default had made up
their minds that something should DO done 10 make
these communities phy their honest debts and hence
the organization OF the association under this dis
cusson As yet the organization was not complete,
numerous details would have 10 be arranged; IL had
not even yet been decided whether the assoca-
ton would assume the form OF y syndicate
or become Incorporated body. Whatever form il
might assume, however, would act as The intcrmo-
diac between thc debtor States. cities and counties
and the creditor bondhoders, who wore all over tho
world. The parties composing this association would
be oi such eminent standing that they would once
command tho confidence Of people everywhere II
should, howcvcr, DO understood In advance that tn
association alone intend further the inter-
ests of us own members aud It's correspondents In
o.her words the association would only endeavor
90 q agent Tor bondhoding members, but would
take charge OF any ybodys bonds II they were Of those
communItes with which they INTENDED to open nogo
tiations The idea OF starting such an ASSOCIATION
had originated hero in New York Various prvate
conferences mad boon held in regard to IT, but no
formal meeting Sunicient progress had been
made as 70 make y safe To announce that
an association Of the sort would DO estab.
hshcdL Judge hackonnon had told him several
days ago tuat whenever his plans were perfected aud
no was ready 70 act he would give tne matter pub
hcty 0f course, ~ already stated could tell
yet exactly what shape the movement would take II
once regularly organised That u portan un
neutrality-suspicious. 70 the defauling Communities
as well as 70 bondhoiders gsnerally-Lo one could
deny In TACT u was gigantic enterprise, OF which
the true scope could only be whom every th ng
should be IN working order IL was mistake how.
ever 10 think that u was movement intended only
10 operate upon tho southern States In default II
would AFFECT nrst and primarily the cities counties
In many OF the Western and Northern States. Any
Dumoe of them mad ailcd provide TOR the pay
oil interest on their bonds and stop should be put
at once TO this wholesale reputation, uniess indeed
all OF them desired 80 follow The bad example OF tho
state OF Minnesota, which had virtually repudIatod ~
entire debt.
s0vnRE0Sry srArHs
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