The Kootenai herald. [volume] (Kootenai, Idaho) 1891-1904, 1896-03-21
Were Bonds Issued Without Au-C
thority of Law?
HAS THAT APPEARANCE NOW
If so. the Stock viii Have Grea'er Value
Than the Bonds-Opinion
in the Yves.

The question brought before the Mil
waukee courts the past week, invoIv-
ing the validity of the Northern Pa
cifc bonds, has been under considera-
ton for several months. A well-in-
formed railroad man of this city in
formed a Spokesman-Review reporter
yesterday that some time ago James
Mcknight expressed belief that none
of the mortgages, save perhaps the
first had been issued legally, and at. :
torneys who were seen by the reporter
regarding the matter said that while
they were not prepared to express a
positive opinion it was their impress
sion that the point raised al Milwaukee
was well taken.
II know that the bondholders have
been on the anxious seat for some
time" said one, land that a movement
has long been on foot to manipulate
congress to legalize the invalid bonds.
Unknown to the people, this very ques-
ton has entered forcibly into the cleo
ton of several senators and members
Of congress. Discovering their peril,
the bondholders have been actively at
work to remove it"
Would congress have power to legal
ize these mortgages?"
That is a question OF course the
attempt will be vigorously resisted by
the stockholders, and even if congress
should enact the desired legislation. it
may be set down as a fact that the
matter will then be carried into the
courts and fought out to the last re-
sort"
There are at least four issues of
bonds outstanding against the North
ern Pacific. These were mostly put out
during the Willard regime. 1t is nosA
contended in the suit at Milwaukee,
that the Northern Pacific was prohibit
ed by congress from making or execut-
ing mortgages on it's properties unless
by the express consent of congress. This
the company, it is claimed, never Sc
cured except in one instance, and in
that the lien has been satisfied
'As l understand this" said a. we'll
informed railroad man yesterday, this
single instance was the issue of bonds
put out by Jay Cooke when he was
financial agent of the road in the early
fOs. Congress sanctioned this in order
10 complete the road. The company
went into the hands of a receiver in
1873, and soon thereafter a plan of re-
organization was executed NV recol-
lection is that these bonds were then
retired, part of them by exchange of
railroad lands and part by exchange
Tor preferred stock. If this is correct.
all the bonded indebtedness of the road
VIII be relegated alongside the ordin-
airy indebtedness-such as the common
and preferred stock. the receivers GER
titicates, etc. In fact, the stock would
be more valuable than these bonds. be-
cause it carries the voting power. and
would therefore be more in demand by
interests striving to control the prop-l
erty."
THE NEWS AT SEATTLE.
Discussing this matter the Seattle
Times says:
THE railroad attorneys who are To-
Gated in this city or who have been in
the city during the past few days in
connection with the Northern Pacific
receiVership did not care to discuss the
question which has been sprung in the
Milwaukee courts as to the validity Of
the Northern Pacific bonds. One of
them who was seen explained that even
though the bonds are found to be lille
gal as it were, the bondholders would
not lose everything At the present
time their claims against the Northern
Pacific property take priority over the
claims of other creditors. If the bonds
e'AC AlDl 6pOu lueH the DOndhOlQerS'
claim against the property will not be
any better than the claims of other
creditors, and it is likely that they will
have to wait a long time before they
get any money out of their investment
THE attack on the bonds, as has al
ready been stated in the telegraphic
dispatches. was made by the Wisconsin
Central company and the Wisconsin
Central Railroad Company. In their
answer to big suit filed against them.
they say that the Northern Pacific COM
pany had absolutely no authority
whatever to issue any of the numefA
Gus mortgages with which the road Il
incumbered and that in consequence all
the bonds issued under the mortgages
are null and void"
VAST INTERESTS INVOLVED
In Spokane no one could be found
who knew how much was involved in
this point The report Of the United
States commissioner Of railroads shows
that there are first mortgage bonds
outstanding to the amount Of s43. 393
600; and of ''Other funded debt" S94.-
SO6,5OO. A railroad attorney said it was
his impression that this "other funded
debt covered the subsequent mort
cages issued under the Willard regime.
If this is the right view of it. there are
$l3S,OOO,O00 bonds outstanding, and If
the point raised at Milwaukee should be
sustained by the courts. they are all