Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1881-10-06
MINNESOTA R. B.. BONDS.
An Oncial History of Their Issue aud Re
pudiatiop, to be Printed by the United
States Census Once.

An Onlcial History Of Their Issue aud Re
pudiatiop, to be Printed by the United
States Census Once.
Hon. o, P. Whitcomb has received from r.
B. Porter, of the census Office at Washington,
Division of Statistics of Wealth, Debt and
Taxation, the following history of the state
debt of Minnesota, prepared in that office
for publication, with the record of debts
of other states. 1t is sent to Auditor
| Whitcomb for revision and correction and he
Is requested to return it before the 18th inst.
| He will add the history of the last year up to
the calling of the extra session, and will also
correct the tabulated statement at the end OF
| the paper and then return it as requested. The
paper is as follows:
MINNESOTA.
| When Minnesota entered upon her existence
as a state, both the United States and Europe
were suffering from the effects of the financial
crisis of 1857. Credit was shaken, imuigra-
ton checked, capitalists ceased to iavest their
money, operations in real estate were suspend
ed. and the settlement of the states, which had
| SO prOpitiously began, was entirely stopped by
| these adverse circumstances. To fully under
| stand the circumstances W hich led to the crea-
ton of the debt of Minnesota, it will be neces-
sary to recall the fact that on March 3, 1887,
| congress passed an act entitled Gan act max
| ing grant of land to the territory Of Mime
sofa, in alternate sections, to aid in the con-
struction of certain rilroads in said territory"
etc. On the 22d of May, 1857. the legislature
of the territory of Minnesota passed an act to
accept the grant and execute the trust created
by an act of congress of March 3, 1857. The
original act of congress granted ''every alter
late section of land designated by odd num-
bers, for Six sections in width, on each side Of
(four) said roads and branches" with grant
In lieu of such of the sections as might be
sold or pre-empted before the lines should be
located. The territorial act accepted the
grant upon the terms, conditions and in-
structlons contained in the comforting
act, and assumed and undertook the trust ere
ates by the said act of cngress.
The constitution of the state of Minnesota,
as originally framed and adopted by her peo-
pie, restricted the public debt, except in case
of invasion or fnsurrection, to $3.50, 600 Sub
sequently it became evident that to insure the
speedy construction of the railroads, for
which the State had received from congress
| the above grant of land, and at the same time
to apply some remedy to the gloomy state of
| things then existing, the state must lend aid
| to these companies chartered by the territorial
| legislature, to which the lands had been trans
| ferred by the same authority for railroad pur-
poses. The Legislature of the state, at It's first
session, in accordance with the mode pre-
scrbed by the constitution for its own amend
ment, passed an act loaning the credit of the
state to the four land companies, to the
amount of $l,250,0O0 each, or $4,000, 900 in
| the aggregate, upon certain conditions, and
providing for the submission of the act to the
vote of the people. The vote was taken on
the 18th OF April, 1858, resulting in majority
| of nearly 10000 in favor of the act, and the
governor duly proclaimed it to have been in
| corporated as part of the constitution of the
state.
Soon after the adoption of what was called
| the ''loan amendment" the railroad companies
commenced work upon their respective lines.
| Upon application being made by the companies
| 10 the governor OF the state for state bonds for
labor actually performed 10 compliance with
The law, it appears that Governor Sibley made
public what he deemed to be the proper con
strnction of the language of the amendment
| and, in order TO exact strict compliance on
| the part of the companies with the prescribed
requirements before any of the obligations OF
thS state should be issued, he prepared and
| placed upon the executive journal on the 4th
| of August, 1885, a memorandum of the condi.
| tons upon which the state bonds would be de-
| livered, copy of which was duly transmitted
| to the companies The memorandum of the
governor was to the effect that the state must
receive in return for the bonds, the exclusive
] first mOrtg gage bonds of these companies to az
amount equal to the state bonds received by
them, giving priority Of lein upon their entire
| lands, roads and franchises in favor of the
| state. The companies objected to this con-
| struction, and upon the governors refusal to
issue the state bonds to them upon any other
terms, a writ of mandsmus was applied for to
the supreme court of the state by the Mime
sofa Pacific Railroad company, to compel the
| governor to deliver to that company the
| bonds of the state without exacting the ex-
| elusive first mortgage bonds of the company
| in return. The question was argued before
| the supreme court, and the majority of that
tribunal decided that the ruling Of the governor
was erroneous and that the state, by her OWE
act, had placed herself on like footing with
other holders of the first mortgage bonds OF
the companies under their deeds of trust, and
could not therefore legally acquire an exclu-
| sive priority OF lien upon the property of the
companies.
Governor Sibley submitted to the writ, and
directed the issue of the state bonds. The
publicity of the disagreement between the
governor of the state and the railroad COM
pany by these proceedings, was the first blow
to the market value of the bonds, which, I'M
der the original construction, had been eagerly
sought for at par. The several companies re-
ceived state bonds due them, and attempted to
effect their negotiation, but without success.
They then appealed to the governor for aid in
disposing of the bonds. Anxious that the
progress of the work upon the roads Should
not be interrupted the governor spent several
weeks in New York city endesvsring to sell
the bonds but without result. That failure
the governor in his message of December 8,
1859, attributes to the opposition of citizens
of the state, acting through the public prints
and by private letters to thwart his efsrts.
Unable to negotiate the bonds received frsm
the state, and possessed Of little or no meaai
of their own, the Railroad companies became
| unable to raise money upon their own bonds,
except at ruineus rates. All labor on the
roads was suspended, and the companies found
| themselves without the means to meet their
enga gements, or at that time, with the single
exception of the Southern Minnesota con-
pany, to pay the December instalnent of the
semi-annusl interest on the state bends they
| had received. Further issue Of state railroad
| bonds was stopped, the issue amounting at
| the close Of 1859 as follows:
| To the Minnesota & Pacific Railroad
company. oeV,OUu
To the Minneapolis & Cedar Valley
Railroad company. co. COO
To the Transit company. ........... 100000
To the Southern Ainlesota COM
pany Observation-Disclosures. of5,GUu
Making in all. s., 275 ,000