The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1905-06-13
Another Move i'm the Matter OF the
Special Tax Bonds.

is a double-column letter in the form
L.. Andrews, a lawyer of 10 Wall street,
dated June 5, and addressed to John q.
Carlisle, jefferson III. Levy, Henry II.
Melville and E. l.. Whicher, commit
tee of North Carolina special tax bond
holders" in reply to an inquiry from
it with reference to the course Of &C.
ton TO be pursued by the committee,
a statement of the financial condition
of North Carolina, and an outline OF
the policy adopted to secure the sails
faction of the special tax debt" This
letter sets forth that North Carolina
is exceptionally situated in respec- TO
the ownership of property not dedicat-
ed TO public use. The state treasur-
ler's .ast report is quoted TO show that
the state has railroad and turnpike
stock to the value of STOPS 900, only
5 1876, 00e of which is pledged 10 Sc
cure debts, leaving an unpledged equity
in these properties of the value OF S4,-
! 152, 900. A paragraph is here quoted
J entire:
'If the b~ondholders were willing 10
accept these railroad properties in 1ull
settlement of the special tax debt, they
would receive values equal to more
than Is per cent. OF the principal Of
| their claims. S1ch an arrangement
would not affect the taxation of the
state to the extent of a single dollar.
! The state is now ievying taxes for the
interest on all her debt on which she
is paying interest, except for the debt
secured by the pledge of these railroad
securities. II the special tax ~bOndnol1-
ers accepted, in satisfaction OF their
rights, these sever millions of guaran-
teed stocks, subject to the existing
pledges, the financial result to the
bondholders would be about $3.50 per
bond, and the taxpayers of North Car
Dina would not De called upon in he
! premises. If such an arrangement were
| made, it should be dependent upon
! prompt action by the officials of The
! state. 1t is only as a speedy solution
that it possesses merit, in view of the
| more ample of the state n
it's moderate liabilities"
The amount of the special a. bonds
outstanding is stated at 81 ,4OO, 900; the
accumulated interest is S23, SAC, 900; to-
tai, $50, $40, 900. 1T is upon the lines
! of moderation and equity" says Mr..
Andrews benignly, that the creditors
of North Carolina purpose to proceed
and further: "The interest, which mas
been allowed to accumulate until 1T
amounts to S23 $40 900, more than,
double the entire principal, may be
cancelled as a condition of this ar
r~angement." That IS to say, il we I'M
derstand the gentieman's advice, 1T is
that North Carolina should turn over
it's railroad and turnpike interests to.
the special tax bondhOiders and these
should thereupon forgive the balau e
of the principal AND all the interest
and call the transaction square. Here
is another quotations. combination
of barney and threat:
There should be no question OF the
acceptance by North Carolina OF such a
reasonable basis for the adjustment OF
this debt. The co.1cive measures which
may be brought TO bear leave no other
to the state. The dllem-
ma presented lies between a promp.
and polite meeting with her creditors
and the subsection to far heavier bur
dens. The federal constitution corners
power on the United States courts to
exert this process against states or the
union at suit of foreign governments
and of sister states. Such bodies pol
itic may be qualified as suitors before
the Supreme court Of the United States
by the acquisition of special tax bonds.
1.-The legislature of the state of New
York enacted a law on May 10, 1905,
which has an important bearing on the
collection of this debt. = By it's proVl-
sions, this state undertakes to accept
assignments of defaulted state obllg-
tons, and to enforce them by her au-
thOrity.
when the debtor is as solvent as
North Carolina and possesses property
as easily reached as her railroad as
sets, sales of her obligations may now
be effected to competent governments,
and afford them large profits. Inc
transfer of these bonds with accrued
coupons to foreign governments would
subject North Carolina to Onerous
judgments and collection Of the special
taxes. AS the accumulated interest
on the bonds aggregate twice the
amount of the principal, one-thlrd OF
the issue, with its overdue coupons,
EQUALS the entire principal. The trans
fer of this One-third proportion and
it's enforcement by another state would
cost North Carolina as much as the az
ceptance of a proposition from the
bondholders to cancel the entire III
~debtedness for the amount Of the out
standing principal. AS a simple bus
mess proposition there be no
question that it is to the interest OF the
state to avoid the exertion OF these
measures against her, and to adjust this
doh+ upon n moderate basis. so reduced
as to be hardly a perceptible feature
in her financial affairs
Mr.. Andrews concludes with the adj
vice that the legislature OF North
Carolina should be prepared TO act
(favorably upon his plan) without rel
! erence to a judicial body.
It is manifest that a determined ef-
fort is to be made to collect these Sps-
! cial tax bonds, or to secure a settle
ment of them Oh the best terms their
- 4lN. Sf0fn lGn