The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1904-02-03
WHAT WILL SOUTH DAKOTA GET ?
WHAT WILL BE THE RESULT?

The United States Supreme Court, by
a vote of five to four, has decided that
South Dakota is entitled to have one
hundred shares of stock in the North Jar
DINA Railroad belonging to North Caro-
lima sold. unless the State pays before
January list, 1906 for the purpose of oh
tanning the $27 900 due South Dakota on
the bonds presented to it by Schaefer. The
stock is now selling at $175 a share and
if it brings that amount at the sale the
sum realized will be SIT. 500, or $500 less
than the 1000 the court finds due. II
the stock is sold, and lacks $1,000 of
paying the debt, would the Supreme
Court issue a decree to compel North
Carolina to levy tax to pay the deficit ?
To ask that question is to show that the
decision of the highest court in the South
Dakota case is wrong.
Suppose that these one hundred bonds
are sold What will the purchaser set ?
Not the SIT 500, for South Dakota's stock
is second mortgage. The State owns
SO ,OO0, 900 in the North Carolina Railroad.
In the celebrated Swazey suit, the FEEDER
al Circuit Court held that this stock
must be held as security for the pay
ment of 3,000, 900 per cent. construction
bonds issued by the State. These bonds
are a first lien on this stock, every share
of it, In the Swazey suit it was ordered
that, after paying the interest Oh tie
construction bonds, any surplus from the
North Carolina Railroad stock should be
applied to creating a sinking fund to the
payment of the construction bonds due in
1919. Therefore, under the decree OF the
if the one hundred bonds are sold, the
purchaser only buys the equity and can
not even realize that until 1919. So. the
purchaser will get nothing but the equity
and must wait fifteen years for that So
if it is the pound of flesh the bondholders
are after, it will be- some time before
they can realize upon it, and the State
will not permit them to shed one drop 81
Christian blood.
The attempt to place North Carolina IL
the attitude of repudiating its just debts
does it's people gross injustice. When the
responsible people of the State returned
to the control of affairs, after the orgy OF
Reconstruction, they found that the car
pet-baggers, scalawags and negroes who
made up the Legislature had saddled a
debt Of over thirty million dollars upon
the people of North Carolina. A committee
of the wisest and safest men in the State
were appointed to compute the debt of
the State and to settle it. Bonds that
were clearly fraudulent were ,repudiateG,
and as to all other bonds full investiga-
ton was had to ascertain what sums
the State had actually received, and then
the bondholders were offered new good
bonds at the rate fixed upon after loug
consideration The financial world APP
plauded the action of the State, and il
nearly every instance the holders of the
bonds were glad to exchange their hold
ings upon the terms offered by the STATE.
That transaction is one of The most cred
liable and honorable IN the history Of
North Carolina. When the wise men were
considering what ought to be paid on tie
various bonds, they ascerta:ned that on
the bonds upon which South Dakota sued,
the State had actually ret,'ved twenty
cents on the dollar for gone. twenty five
cents on the dollar for others, and
few had been sold at thirty ana forty
CENTS on the dollar 1t rs never been
possible to ascertain exactly how uch
the State received. After patient and
careful investigation and consideration,
the concensus of the best opinion obtain
able was that the State had received an
average of about twenty-five cents on
the dollar and that the bonds were not
issued. 1t was then determ-
ired to refund these bonds on the basis OF
twenty-five cents on the dollar. All those
herds, except the $24O 900 held by Schaefer
for himself and others and
few others not located, have been
refunded. The Schaefers refused to
accept the settlement and have held
out for a higher sum than was paid to
all the other holders of North Carolina
bonds. After the passage OF the act in
1879 ito compute and refun1 the State
Ccbt,' there has been no authority vested
in any executive officer 10 make settle
ment in any other way than authorized
in that act. Subsequent legislatures have
held that the matter was honestly It
tied in 1879 and have refused to reopen
the settlement then made fairly and hon
estly. Schaefer and others have them
selves only to blame that :hey did not
refund their bonds, as did nearly all The
other bondholders under the 1875 act. Thu
State recognized it's obligation 10 pay