The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1901-11-24
JUDGE AVERY GIVES FACTS
He Drew Bill That Pledged Stock Of
North Carolina Road.
EVASION OF THE LAW IN THE BOND SALE
The Purchasers Paid Only About Thirty Cert.
on the Dollar For the Bonds. Private
Stockholders Made Money
on Contracts,
on Contracts.

To the Editor: Your inquiry reached me
today, and, in submitting answer within
the prescribed time, must give my recol-
lections on the spur of the moment, OF
what occurred years ago.
The charter of the Western North Caro-
lima Railroad Chapter 22S, Laws OF
1S54'5,) as amended by the laws of 1860
81, provided that whenever the president
of the company should certify to the State
Treasurer that fifty thousand dollars OF
mere had been subscribed to the capital
stock of the company, the latter should
issue State bonds of the denomination OF
one thousand each in double the amount
so certified to have been subscribed. The
effect of this legislation was to subject
the four millions stock owned by the State
in the North Carolina Railroad Company
to a second statutory lien or mortgage to
the amount of State bonds that might be
issued under the act. The same stock
was already pledged with the faith of the
State by the charter Of the North Carolina
Railroad for the payment of the bonds is
sued to construct that road. The work OF
construction was suspended soon after the
war began, when the terminus of the road
was four miles below Morganton, but dur
ing the year 1866 the road was completed
to that town.
II 1867 the bonds of the State were not
quoted had no market value, and were
seldom sold privately at any price. Anx-
ious to see the road extended, the writer,
as Chairman of the Senate Committee on
Internal Improvements introduced bill
which, was passed December 10th, 1866,
and published as Chapter CT, laws of 1866
'67, This amendment directed the Treas
urer of the State whenever construction
bonds should thereafter be issued under
the provisions Of the charter, to attach
a mortgage deed to every bond pledging
one thousand or ten shares of the four
millions of stock of the North Carolina
Railroad Company owned by the State.
More than million and half Of State
bonds were issued under this act before
the company passed under the control of
the reconstructionists in 1862 and with
the individual subscriptions of one-third
OF the stock, paid for the completion of the
line to Old Fort But there was expend-
ed on the Blue Ridge, in addition, about
three hundred thousand dollars realized
by Col. Tate from the special tax bonds
issued for the Eastern Division Of the
Western North Carolina Railroad. When
the work of the mountain division was
suspended in 1872, there was due Malone
and Wilson, contractors, s175000, which
debt was assigned to r. Y McAden, who
sued and secured judgment.
Work was resumed on the Swannanoa
tunnel under the supervision of w. w.
Rollins, S. Med. Tate and w. S. Pearson,
Commissioners, appointed by Governor
Brogden and empowered by the act OF 1873
to complete it with convict labor. They
began the work and during Vance's ad-
nlinistration from 1877 to 1879, and the
first years of Jarvis term the tunnel was
finished and the track laid to Asheville.
Meantime the company had created a
mortgage debt of about eight hundred and
fifty thousand dollars, and was not able
to buy new engine, though it's rolling
stock was insufficient to furnish mere than
two mixed trains. At this juncture w. j.
Best appeared upon the scene and in
January 1880 proposed to buy 1.-The States
interest in the company The Legisla-
turc passed the act Of March 1880, provd-
ing for the sale of the stock of the State,
then amounting to over two millions
The consideration coming to the State
was an agreement, first by Best and his
associates and later by the Richmond and
Danville Railroad Company as their as
signee, to complete the road to Paint
Rock and the branch to Murphy, to keep
the interest paid on the mortgage debt
(of $3.50, 000) and ultimately to pay the
principal of the debt. 1t is due to Col
Andrews to state in this connection, that
when Best was about to fail to carry out
his contract, Col. Andrews, at one time.
without any assurances from the Rich
mond and Danville Railroad Company
endorsed for one hundred thousand, as I
recollect it, in order to continue the work
of construction.
But little more than a year before the
sale was authorized the Legislature upon
the urgent recommendation of DR.. j. NJ
Worth, State Treasurer, and of Vance and
Jarvis had passed the Act to Compro-
mise, Commute and Settle the State Debt
flaws OF 1879, Chapter 98.)
Every succeeding Legislature from 1870,
when the Democrats first got control af-
ter reconstruction, had discussed the
question of providing for the payment of
the debt created before the war. part
of the price of readmission into active
participation in the government of the
United States was, that the State should
repudiate all Indebtedness. whether EVIL
denced by it's bonds or not, created be-
tween May 1861 and the close of the war
in 1865. After 1870 the people of the
State were bitterly opposed to adding to