The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1881-02-24
Tho Early History Of the Old Railroad
ISOnds

Tho Early History Of the Old Railroad
Bonds.
Editor Fres Press:
For some time now, the old, old
story about the railroad bonds and
their reputation, has been gnawing
at the vitals of our legislators until
"patience has ceased to be a virtue"
But the true inwardness of those old
bonds has not been told of late hence
reproduction of the interesting
story in several chapters will bear
reading:
March 3, 1857. Congress granted to
the Territory of Minnesota in trust,
five million acres of land for building
certain railroads. The same year the
Territorial Legislature accepted the
trust. Certain companies accepted
the conditions of the land grant and
agreed to build the railroad for the
five million acres of land. Oct. IL,
1857, a constitution was adopted
limiting the State debt to two hun
dred and fifty thousand dollars. State
officers and members of the Legisla.
ture were elected ut the same time.
The members, thus elected, met in
st. Paul December, 1857, (the So
called Legislature). But as there
was no Lieutenant Governor, the
senate was not legally organized, and
had no more authority to make laws
than Il debating club" Il beg par
don of the debating clubs for the
allusiOn). The railroad companies
had not money to build the roads
they thought they could sell Il part of
the lands and then by mortgage raise
enough money to grade part of the
road. Then mortgage the road bed
for the iron and rolling stock; and
then mortgage again to complete the
roads. The financial crisis of 1878
ruined their calculation. They saw
that they could not complete the
roads without State aid. The So
called Legislature passed bill sub
hitting a proposition to the people to
amend the Constitution-called the
five million loan"-but this bill was
not signed either by the Governor,
Lieutenant Governor, or Secretary of
State. On the 18th day of April,
1858, the so.called Constitutional
amendment was adopted. And on
the 9Th day of May, 1858, the SO call.
ed Governor proclaimed its adoption.
But the State was not admitted till
May 18th, 1858, and as the Territorial
Legislature had adjourned sine die,
in 1858, the so.called Constitutional
amendment was not adopted either
by the Territory or the State. The
whole matter was null and void.
But some of the bondholder's lawyers
tried to make this parallel case with
that of a minor-but a minor should
not be made liable for debts contract
ed before he was born. There is no
such thing rs State in its minority.
a Territory is not an infant State.
The Legislature passed an act char
tering wild Cat" banks on the Sc
curity Of the "old bonds" and by
this means thousands were defraudcd.
There was no law passed to tax the
people for the payment Of the inter
est on the bonds-the railroad com.
panies were to pay the interest on
| the bonds. The Constitutional
amendment provided that the lands
and roads should be exhausted before
the people would be taxed for either
principal or interest on the bonds
On such terms the people voted for
the "f1ve million loan" so.called.
1858 work commenced on the roads.
Merchants, boarding house proprie-
tors, and labOring men furnished
most of the means to grade a part of
the roads. A mandamus was issued
by the Supreme Court to Governor
Sibley to issue certain of said bonds.
the company claiming compliance
with the act of Congress and the act
of the Territorial Legislature. When
the mandamus case came up for
hearing the Judges said that they had
no authority to compel the Governor
to do his official duty as the Execu.
tive of the State. The Attorney
General waved the question of jnris.
diction, and the question tried before
the Court was won by "preference. :"
2 MINI. r. p 1917. And in subse.
quent mandamus the Court held that
it had no authority to compel the
Governor to issue the bonds. 4 Minn
t., p 309-3l2-Governor Sibley went
to Wall street to negotiate the bonds.
He did not succeed. Certain men,
bers Of the legislature signed a pro.
test against taxing the people for the
payment of the bonds or the interest
thereon. This protest was published
in the newspapers. Governor Sibley
applied to several bankers in New
York to negotiate the bonds. Ger.
tain lawyers in New York then held
that the bonds were illegal. That
there was no law for levying a tax on
the people for the payment of the
interest on the bonds That the con.
stitutional amendment was passed
nearly month before the State was
admitted. That the proclamation of
the 5th of May, 1853, announcing
that the constitutional amendment
was adopted, was prior to the admi..
sion of the State MAY 18th, 1859.
That no subsequent proclamation was
ever issued, consequently that there
is no legal evidence to show that the
amendment was ever adopted. That
the laws and Constitution of the State
formed part of the contract between
4. A =