The semi-weekly messenger., 1906-10-30
SOUTH DAKOTA BOND SUIT.


state bonds issued in behalf of the
Western North Carolina railroad. We
are sorry that we are unable at this
time 70 give him all the information
desired These were the bonds which
figured in the famous suit of the state
of South Dakota against the state of
North Carolina, brought in the federal
supreme court to recover the value Of
ten bonds of the face value Of one
thousand dollars each issued by North
Carolina many years ago. Our jack
sonville friend asks us:
Will you kindly give through the
columns of your paper the history of
the bonds which South Dakota sued
North Carolina for and for which
South Dakota got judgment some time
ago? What is the amount of that is
sue Of bonds? When issued, for what,
and what attempt has North Carolina
made to pay thesk bonds and why has
the face value? "
We will give what information we
have at hand on the subject. In the
first place, this set Of state bonds must
not be confounded with what are
known as the special tax bonds is
sued by the republican legislature in
reconstruction and carpet-bag rule
days and which have been repudiated
by the state because of frauds connect
ed with their issue and placing upon
the market whereby the state never
derived one dollars benefit from the
proceeds of the sale.
The Western North Carolina Rail-
road Co.. was chartered by the act Of
1886 and the amendatOry act Of
1860-61, the state becoming a stock
holder and agreeing to issue bonds to
aid in the building of the road-to the
amount of four million dollars, we
think. In 1866 the legislature, in order
to enhance the value when put on the
market of such of it's bonds in aid OF
the construction of that road which
passed a bill, the preamble of which
states that by the combined force of
those other two acts the faith of the
state of North Carolina was pledged
for the payment of four million or dos-
lars in bonds Of the state, portion of
which have already been issued and
whereas it is manifestly the interest
of the people Of the whole state that
the residue of the bonds, when issued,
shall command high price in the mar
ket." therefore it is enacted that the
public treasurer is directed whenever
under the mandate of the two acts
above referred to it shall become his
duty to issue bonds of the state to the
amount of fifty thousand dollars or
more ito mortgage an equal amount
of stock which the state now holds in
the North Carolina railroad as collat-
eral security for the payment of said
each several bond a deed of mortgage
for an equal amount Of stock of said
North Carolina railroad, said mortgage
to be signed by the treasurer and coun-
tersigned by the comptroller and to
constitute a part of said bond
In pursuance of the provisions OF
these three acts Mr.. Kemp P. Battle,
then treasurer Of the state did in
1867 issue certain number of bonds
as provided for in those acts and in
accordance with the mandate of the
act of 1866 endorse on the backs there
OF the pledge of the states stock in the
North Carolina railroad as additional
security for their payment These
bonds were put upon the market and
sold at a discount. The purchase money
went into the construction of the
Western North Carolina railroad. Of
which company the state was a stock
holder. We believe the act authoriz-
ing the issue Of the bonds provided
that they should not be sold at less
than nar, but Treasurer Battle, seeing
that the state government would soon
pass into the irresponsible republican
horde If reconstruction times, deemed
it to TIE interest of the state that he
should take less than par rather than
have the building Of the road fall to
that crowd, so he put them on the
market and sold at a discount. The
history of the special tax bonds issued
by the next legislature showed how
wisely he acted.
The next stage was when In 1879
the legislature passed an act for re-
funding the state debt The bonds
were becoming due and there was no
money with which to pay them. That
act divided the outstanding bonds into
three classes They were refundad of