The news & observer., 1905-06-28

case, a batch of $4,000 in bonds, and
the scandal of this proceeding brought
odium on the bonds.
AS a matter of fact only about $14,
100000. out of $25, 100000 of bonds
authorized, were actually issued. Nor
was the validity of these unquestioned.
During the progress of the Legislature
leading Democrats and the public
press denounced the whole proceeding,
questioned the validity of the begisla-
ture, denied it's right TO bind the peo-
pie and served notice on the world al
large that the taxpayers of Old North
Carolina disowned these bonds, dis
avowed their validity and would never
pay them.
Among other objections, it was
urged that the Constitution establish
ed a limit of taxation, and that TINS
limit could not be exceeded merely Dy
calling the unconstitutional tax in ex-
cess of the limit a special tax; but
the promoters of these schemes neld
that where a special tax was lald the
constitutional limit did not apply. Ana
so to pay the interest on these bonds
they levied special taxes which gave
them their name. These taxes amount
cd to "a cents on the hundred dollars.
During the summer interest was de-
faulted and the value of the bonds de-
clined.
Swepson had deposited the greater
part of his bonds as collateral sccurl-
ty in New York for a loan of about
one million dollars, about $72O000 OF
which he invested in Florida Railroad
stock and bonds, which, in the end
yielded no money. AS the bonds sank
in value, they were thrown on the
market and the depreciation was
fastened.
At length, in September a great eff
fort was made to restore their mar
l<et value. 1t was given out the bonds
would soon advance, and a comblna-
tion was made to bull them. Swep-
son, Littlefeld. A. J. Jones, president
of the Western r. r., and DR.. Sloan,
president of the w. G. & r. r. r.. and
others, along with the Governor on
the State and the State Treasurer, had
a meeting in New York and the de-
tails of the arrangement were agreed
on.
Soutter & Co. had been the financial
agents of the State, and now these
were discharged and CleWS x Co. sue
ceeded them.
An agreement was made by the
railroad presidents to the effect that
they should so into a pool and use
their bonds on hand as a margin to
buy in other bonds on the market ano
with them to make the movement live
ly and create the impression that
there was an extensive and more gen
eral demand for the bonds. The pool
being formed, Andrew Jones. Little
field, Swepson and Branch & Co. put
their bonds with firm styled Utley q
Dougherty as a margin to carry out
this programme. And the speculation
began Latin, Martindale, Moore and
al, inc. 10 =
lation.
1t was agreed that the Treasurer
should make advertisement that the
interest then long in default would be
paid on presentation of coupons IN
Raleigh, and the spectators agreed to
furnish him with the cash to pay the
interest. Besides, the Treasurer had
replaced the S15O,000 borrowed from
the Educational Fund, and that was
used to buy bonds and bull the mar
ket. And $125, 900 derived from the
sale of land scrip for an agricultural
college was used in the same way
Under such manipulations' the bonds
advanced few cents; but just as the
speculation was beginning to work
the gold panic of that year set In. and
suddenly all sorts Of stocks and bonds
declined and in few days the rum
was complete. The loss on margin
rcighborhood of $500, ,0oC. The bond,
deposited as margins were sold for a
song. and the whole issue of specia
tax bonds for internal improvements
pctercd out
Andrew Jones, president of the
Western Railroad. did save enough t.
lose u batch at faro, and Josie Mans
field a noted courteSan Of New YORK
it appears, got her share out of the
wreck.
It was a Waterloo for the North
Carolina railroad presidents, and dis
astrously involved SwepSon, who hac
entered into the affair with large
private fortune at his back. He re
tired from the presidency of his rail-
road and Littlefield was elected II
October as his successor, and tht
funds Of that company were abSolu
" dissipated. Jones bad nothing tt
show for the bonds of his company
while DR. Sloan. who was late IN get
ting his bonds from the Tre a.sury. re.
fused to share in the losses of the poo
and deposited his bonds with Pickerel
& Co, from whom he was never aDlt
TO redeem them. The whole i9suc wac
lost. BY their breach of trust the
railroads derived no benefit from tho
bonds; nor did the state.
Quickly following these events th'
LEGISLATURE again CpllNcllch III VS. "'r'7
session. The few Democrats In th(
body were active and aggressive Bu
/ the leaders of the Republican party
were determined to retrieve the dis
| astor. if possible. They pointed on
| that but St4,000.0O0 of special ta'
! bonds had been issued. and the taxes
were coming in 20 pay the in tcrest
! that the entire State debt was bur sou.
| OOO, 900. and what was that to Norlf
Carolina? That there was only one
road open, and that was to press on
| Sustain the credit of the stats; ta'
the people; pay the interest, ana loof
to the future development OF tn" Stat'
! to settle the principal But the peo
| pie were not so complaisant.
The public mind was greatly eEcltcu
At once measures were introduced Ii
both houses covering the whole grount
| of the special tax bonds. Resolutions
! to investigate railroad frauds; bllls u
protect the interest of the state ant
! to require accountability on the par
/ of railroad officials; bills toroiddihs
! the payment of interest and arrcstlnt
! the collection of special taxes oi!r
| forbidding the Treasurer TO issue afls
more bonds and requiring the railroad
presidents to turn into the State Ire'S
| ury all on hand undisposed OF, an'
! repeating ell of that legislation.