The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1902-12-20
AN ABSURD CON IGNITION.

In an interview in the Southern Rail-
way organ, called for short the Morning
Post Git was first published under the
name of the Raleigh Tribune) ex-Gov-
ernor Russell undertakes to show that
North Carolina will be richer if it pays
the large sum of money involved in
the South Dakota bond suit than if it
gains the suit. In yesterdays Post, there
is a qualified approval of Russells alb
surd argument Here is Russells inter-
view:
There is a fact about this business
which only lawyers who have studied
the case can understand, and that is this:
The State of South Dakota and the
second mortgage bondholders contend be-
fore the court that the first mortgage is
due and must be paid off. If the court
sustains this contention, then North
Carolina instead of losing anything by
this suit will be the gamer by a very
large amount of money.
SO. If South Dakota gets a judgment
for it's money, does it not win it's case?
"a Yes.
the case. does it not follow that North
Carolina loses it?
"a. No. North Carolina would lose it
nominally by there being decree against
it, but it would really make big money
by losing the law suit. This sounds
paradoxical, but such things have hap
pened between man and man.
20. Please explain what you mean?
Ill &c hof
enough Of the State stock of the North
Carolina Railroad shall be sold to pay
off both mortgages then if the State
should prefer not to sell its stock, it
would simply borrow money on it suf-
ficient to pay eff the two mortgages.
Now, suppose the second mortgage oo-''d
be compromised for s4S0,OO0, the first
mortgage is 50, 100000 Add these figures
together and you have $4,000 00 l do
not believe there is a banker in North
Carolina who will deny that the State
can borrow at per cent. $3,2o0,000 on
its North Carolina Railroad stock which
is worth on the market SIS, 500, 600. Now
this first mortgage debt is drawing 6
per cent. and unless otherwise decided
by the court it runs until 119-that is
the State must pay per cent for seven
mortgage, the principal of which is ST.
100. 600 Now if the court holds in favor
of South Dakota and the second mort
gage bondhclders, and DEGREES that the
first mortgage is due and shall be paid
out of the security G. e., the State
stock, then the State can stop the sale
of it's stock by borrowing money at 3
per cent. and pay off the two mortgages.
Suppose that to pay off these two mort
cages would require s3,200,00O Now.
stopping there, what would the State
lose by the South Dakota suit? 1t would
lose the difference between the 81, 600
and s.. 200, O00 that is, $4S0,000. In other
words it would lose the $3.50. 600, which
it would be paying to get rid OF the
second mortgage. What would it gain!
1t would gain the difference between 6
per cent. and per cent, that is' three
per cent. on $2,72O,O00 for seventeen
wears, which is about 81, 10000 The net
gain to the State would be about $500, 900.
And this would be the saving to North
Carolina under the courts decree In
favor of South Dakota and the second
mortgage bond holders. Let financiers
figure"
When North Carolina gets rich by pay
ing over a million dollars it does not
owe, then men will lift themselves up to
the top of church steeple by taking
hold of the strap of their boots