The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1901-11-24

fourteen millions Gas I recellect the
amount without referring TO statistics
twenty-five millions Of special tax bonds
issued under carpet bag legislation be.
tween 1868 and 1870 because these bonds
had been sold for from five to thirty cents
on the dollar, and the proceeds of sale
except about half million, had been mis-
appropriated by politicians of the recon.
struction era. Ultimately in Difference t.
the popular demand, the constitutions
amendment, providing that the special ia,
bonds should never be paid unless the act
authorizing payment should be ratified
by the people was passed in 1877 and this
amepndmcnt had been submitted and rati-
fed in 1879.
The special tax bonds being thus elm
mated from the settlement, the Legis-
lature through its finance committee ant
Treasurer Worth communicated with the
capitalists, who neld the greater part :.
the bonds issued before 1861, as well as
those issued from 1865 to 1868. They con.
scented to take forty cents on the dollar
of the face value of the ante war bonded
debt.
The bonds issued in 1867 to aid in the
construction Of the Western North Caro-
NdllIO WSIS uSliNSI eu " tilc IcSl-
dent of the company, upon his certifcat tie
that amounts above fifty thousand in
stock had been subscribed by solvent in
dividuals, and upon his bid on behalf OF
the company Of the face value to be paid
to the State in certificates of stock. This
was an evasion of Section 81 Of the char
ter which required the State Treasurer
to advertise for sealed proposals for each
batch of bonds sold, and to accept the
highest offer. being not less than par, but
a similar provision in the charter of the
North Carolina Railroad Company had
previously been construed and acted on
in the same way. The bonds were sold
by the President in 1867, SIS l recollect the
facts, at probably thirty cents on the
dollar. Many of the estimates on the work
of construction done by the subscribers
for the One-third payment Of the stock,
in the capacity Of contractors, were so
large that two-thirds of the estimate
covered the cost of grading and cross
ties. The result was, that in many in
stances the money realized from the sale
of the State bonds built sections of the
road, yielded money profit to con-
tractor, who subscribed to the capital
stock, and in addition, gave
him stock, the face value of
which was third of the es-
timated cost of the grading and crossties.
Nominally a subscriber for only two
thirds of the stock, the State often paid
out of the proceeds of bonds sold at a
heavy discount for the stock of the indi-
vidual subscriber as we'll as for it's own
shares. When the act of 1879 was passed
the stock of the company was not worth
three dollars on the hundred when sold
privately and nothing in the stock mar
kets. The bonds issued in 1867 and upon
some of which South Dakota brings suit
were secured by statutory lien upon
the stock of the State in the Western
North Carolina Railroad Company, as well
as by statutory second lien on an equiv
alent amount of the States stock in the
North Carolina Railroad Company (See
Charter, Chapter 22S, Sec. 3S, Laws of
1S54-'55) But in 1879 the stock in the
latter company was not worth more than
thirty cents on the dollar, while that in
the former commanded only the nominal
price already mentioned. The State was
justified morally in offering in bonds, as
it did, more than it received in stock
then lin 1879 worthless. My recollec-
ton is, that the Swazey suit, in which
the holders of the construction bonds for
the payment of which the stock of the
State in the North Carolina Railroad was
pledged, had sequeStered the dividends, or
the State stock, and were seeking to sub
ject the stock itself, was still pending
That litigation was compromised after
wards. The stock of the State is now
pledged for the payment of the new con-
struction bonds, but a sufficient sinking
fund is being set aside to pay these bonds
at maturity
The present holders of the bonds in
question doubtless bought them for less
than twenty-five cents in the dollar OF
the seventeen hundred thousand issued
all but thirty thousand have been surren-
dered for new bonds at the rate of TWEEN
ty-hve cents in the dollar of the face
value of their old bond.
For four years the opinion has been re-
iterated time and again by our Supreme
court, that the Western North Carolina
Railroad is still an existing corporation,
whose franchise is subject to the lien of
an outstanding first mortgage bonds, and
to the superior lien of judgments obtain
ed for the negligence of the Southern in
operating its road. Notwithstanding this,
the agents of the Southern are swearing
from Week to week in petitions for re-
moval, that the Western North Carolina
Railroad Company no longer exists. Will
they continue 20 verify such statements
when the Federal courts shall hold that
the States stock in the company is still in
existence, and that some thousands OF
shares of it are still subject to a statu-
tory lien? If they hear not Moses and
the prophets, will they not believe when
their friend the Circuit court rises up
and says that the dead corporation is re-
stored to life?
A. C. AVERY.
Morganton. N. c., November 10th, 1900.