Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1923-02-10
Henry C1eWs' and Georgia
Bonds
BY JOHN T. BOIFEUILLET

- banker, the panorama of the most SEN
| sational financial epoch in the history of
| Georgia is unrolled.
1t would take pages of The Atlanta Jour
| nal to carry the story of Georgia's illegal
/ bonds. | can only attempt in this article
| to give a few glimpses of the narrative as
| have caught them from historical publica-
| tions.
Somewhere about the year 1869, or 1870
| perhaps, Governor Bullock, through the in
| fluence of H. l. Kimball, appointed the
| New York banking firm of Henry Clews &
/ Co. financial agent of the state of Georgia
to negotiate the sale of several million dol
lars of bonds of the state. The legislature
! prescribed that the proceeds from the sale
of these bonds were to be applied only to
! the payment of past due bonds of the state
| and the past due interest account. A pay
ment of the proceeds to any other purpose
was termed 'misappropriation of the funds
/ of the state" Clews & Co., as agents, SO
it was claimed permitted officials of Geor-
| gia to draw on this money and to apply
! 1t to purposes unauthorized by law. Mr..
] Clews always earnestly contended that in
| all his transactions in connection with the
! bonds he acted in perfect good faith
Enormous Legislative Cost
The last reconstruction legislature went
! out of existence on October %, 1870. It
| was in session 92S days, and cost the
| state nine hundred and seventy-nine thou
lie
| Toward the close of the term it. became
| evident there was not enough money in the
| treasury of Georgia to defray. the expenses.
On August 27, 1870, the legislature passed
an act authorizing bond issue to meet the
| eXigency, and Governor Bullock issued cur
| rency bonds to the amount of two million
dollars to raise money by hypothecat;on.
| On September Is, of the same year, the
| general assembly passed an act providing
for an issue of three million dollars of
|
rency bonds, and for the other purposes
above mentioned.
According to the record, as I find it,
when the gold bonds were issued $1,000
| of them were placed in the hands of Clews
| & Co., for negotiation; 100000 were
| placed with Russell Sage to secure loan of
| $375,000; 100000 with the Fourth Ma
! tional Bank of New York A. l.. Wilton,
| $1O0,000; H. I. Kimball $250,000 on the
! opera house-the old capitol-on Marietta
! street, and J. H. James 100000 for the
| governors mansion on Peachtree street.
Law FIagrantly Violated
| Subsequently, the bond investigating COM
mittee composed of Thomas J. Simmons
| John l. Hall and Garnett Mcmillan, ap-
| pointed by the Democratic legislature of
| 1871, discovered that $1,150, 900 of the two
| million currency bonds had not been re-
| deemed with the gold bonds, as prescribed
| by law. Of the dead outstanding currency
| Sage, $4,000; H. l. Kimba1l had nego-
| tiated $4,000 of them for a loan of
| $4,000 from J. B. Johnston & Co.. and
| $4,000 for loan of $4,000 from the
| Fulton Bank of Brooklyn, N. Y. AS these
| currency bonds should have been surren-
| dered by the holders in exchange for the
| gold bonds, the Democratic legislature en-
| acted that the failure to do so rendered the
| obligation null and void.
| The legislative investigating committee
also ascertained that 100000 Of the gold
bonds were still in the possession of ClewS
& Co., unsold, and recommended their can
collation., which the legislature promptly
| decreed.
Fraudulent Railroad Bonds
1t is further related that the custody ant
sale of a large amount of bonds, Illegally
endorsed by the state Of Georgia, for building
railroads within her borders, were entrusted
to Clews & Co. One of the most con
spcuous of these enterprises was the Bruins
wick and Albany railroad 1t sale
that the bonds were issued and endorsed
in advance of the work of construction, anC
the state authorities required no certifi
cate whatever of the engineer as to the
progress Of the work. The bonds bore M
date of endorsement. About $1,60O,0O(
of these bonds were signed by an individual
as president of the road some months af&el
he had ceased to be president I Some o
the bonds, so it was stated, were ISSUED
in duplicate and triplicate.
100000 Into KimbalI House
I make the following quotation from
t Avery's highly interesting History o
| Georgia"
Among the historic landmarks Of the
| reconstruction period is that magnificen
building and most valuable instrument il
Atlantas progress, the Kimball House. 1
was a superb hostelrie, far ahead of the
growth of Atlanta. 1t was begun in April
and finished on the 18th of october, anC
its construction was a marvel Of rapid
work. 1t cost over 100000, and the agent
of Henry Clews, Mr. Crosby, told the write
that 100000 of the money advanced CT
| state endorsed bonds to build the Bruins
wick and Albany railroad had been traced
into the construction of the hotel"
Historian Avery referred to the origina
, Kimball House, which was destroyed b!
, fire.
$8,OOO,OOO of Bogus Bonds
When the Democratic legislature of 1877.
2 was in session, the late Chief Justice
Thomas j. Simmons, who then represented
the Macon district in the state senate, an
the late Judge John I. Hall, who was rep
| resentative either from Butts or Spaldini
county each introduced a bill in his re
spective branch of the general assembly t
investigate the whole bond question, and
together with Garnett Mcmillan, the thlrt
, member of the celebrated bond lnquir,
committee they made an exhaustive lnVes
tigation. AS a result OF the committee
recommendations the legislature declared
the following S7,957,000 of bonds null
, and void and the same have never beef