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PAGE FOURTEEN
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THE BULLOCK BONDS.
A Full History of Georgia’s Fraudu
lent They Were De
clared Invalid —They Were Bonds
Endorsed by the State, But Were
issued Fraudnulently-TAnd the
Legislature Afterward Declared
Them Invalid—Henry Clews is
Still Harping on Them.
What are the Bullock bonds*/
That is a question which thousands
of people ask, but few know other
than that they were fraudulently is
sued bonds which Georgia has since
declared invalid.
There were $6,709,000 of them.
Tney were issued oy Uie reconstruc
tion uuininisuanon in Georgia lor the
benem ol liie crowd tuen in cnarge
of uie state, Tlie state received none
of Uie benents supposed to be derived
from tne issuance of bonds.
When alter a thorough investiga
tion tne succeeding state governments
found them to be fraudulent they
were so declared.
it happened that Henry Clews &
Co., me i\ew lora banners and brok
ers, got control of a large portion
of inese bonds at a song, pernaps
knowing tneir full cnaracter. bince
they were repudiated Mr. Clews has
been striKing at Georgia through his
syndicate newspaper letters. He has
been vicious m ms attacks, thinking,
peinaps, by taat means to so injure
the credit of tne state as to force her
to pay these bonus. That, however,
is out of tne question as under ner
Constitution Georgia cannot pay one
dollar on any one of them.
Mr. Clews' last utterance on this
subject is as follows:
‘ ‘ The worst swindle ever perpetrat
ed upon the men of Wail btreet was
the work of the sovereign state of
Georgia. Soon after the close of
the war, the state named, needing
money for internal improvements, is
sued bonds to large amounts, and
these securities were freely purchased
in the north and in Europe, several
million dollar's of good northern
money thus contributing to the en
hancement of the taxable value of the
property of that state. These bonds
were repudiated in 1373 by a special
act passed by the legislature of that
state and the confiding northern men,
who, believing that no good could
come of trampling upon a fallen foe,
and regarding the south as an erring
brother to be welcomed back to the
family fold as a sharer in its mutual
sympathy and material prosperity,
had loaned their money to one of its
most prominent states, w r ere swindled
out of every cent they had thus in
vested.
At the time of the passage of this
swindling legislative act, I held bonds
of the state of Georgia to the amount
of several millions, while many other
northern financiers had also invested
very largely in these securities and
suffered equally with myself by that
infamous repudiation.”
Now, let us see what these bonds
were.
Governor Bullock took charge of
the government of Georgia in July,
1868. At that time the indebtedness
of Georgia was $5,827,000, as shown
by the treasurer’s report in 1872. He
resigned bis office on the 30th of Oc
tober, 1871. At that time the in
debtedness of Georgia, exclusive of
railroad endorsements, had been in
creased to $12,450,000. From that
$12,450,000 should be deducted sl,-
800,000 bonds that appear on their
face to be gold bonds of the state
of Georgia, but which as shown by
the act of the general assembly, were
issued in exchange for the second
mortgage bonds of the Brunswick and
Albany railroad to bond that com
pany, and therefore, not properly
classed among the state’s own in
debtedness. During the same period
the treasurer reports $5,733,000 bonds
endorsed by all railroads. To that
$5,733,000 should be added the sl,-
800,000 in aid of the Brunswick and
Albany railroad. Six hundred thou
sand dollars of this should be placed
to the Bainbridge, Cuthbert and Co
lumbus railroad, though only $240,-
000 can be found as now outstanding;
but there were $1,450,000 bonds en
dorsed during this period in the aid
of the Macon and Brunswick railroad.
Thus the total of the state’s
indebtedness at the end of Governor
Bullock’s administration was some
thing over nineteen millions of dol
lars —an increase in three years of
from five millions to nineteen mil
lions of dollars.
At the time the press of the state
charged fraud. Governor Bullock
left the state and the succeeding leg
islature appointed a committee to in
vestigate the debt of the state.
All the bonds issued after July,
1868, were called in to be registered.
All were examined upon being regis
tered and the committee reported .
some of the bonds were valid and
some invalid.
Outside of the railroad bonds the
debts Georgia declined to pay was an
alleged on open account to Mr. Clews
of $4/,500, an alleged debt to Clews
Habiscnt & Co., of .London, of $90,-
000, an alleged debt to Boorman,
Johnson & Co of SBO,OOO, and an al
leged debt to the Button Bank of
Brooklyn of $30,000, all of whom
claimed to hold certain of her bonds
as collateral to secure their alleged
claims. The amount of the alleged
indebtedness dn her own bonds that
Georgia declared invalid was $252,-
000. Her reason being, that even
admitting the validity of the bonds
themselves, she did not owe the debts
for which the parties claimed to hold
them as security.
In addition, she found a large num
ber of debts that had been contracted
in aid of different railioads, and she
declared not all of them invalid, but
only the first mortgage bonds of the
Brunswick and Albany railroad, the
bonds of the Bainbridge, Cuthbert
and Columbus railroad, the second
mortgage bonds of the Macon and
Brunswick railroad, the Cherokee
bonds, the Cartersville and Van Wirt
bonds and the Alabama and Chatta
nooga bonds, and added to them she
declared invalid the $1,800,000 of
semi-annual interest gold bonds issued
under the act of October 17, 1870, to
aid the Brunswick and Albany rail
road Company, making in all $6,709,-
000.
The Railroad Bonds.
The first railroad bonds endorsed
were $194,000 for the Alabama and
Chattanooga. They were issued under
an act of the 20th of March, 1869.
The act recites that the endorsement
should be placed on the second mort
gage bonds. In the face of this was
WATSON’S WEEKLY JEFFERSONIAN.
a provision of the stats constitution <
that no aid should be granted to any
railroad or to any private enterprise,
except on three sonditions: First,
that private parties must have al
ready invested in the company an.
amount equal to the aid asked; sec
ondly, that the company must give
to the state a first lien upon all the
property that it owned; and, thirdly,
that even when these requisites were
complied with the state had no righ:
to grant aid unless the enterprise
was one for public improvement.
Now, on the face of the act that
provided* for the aid to the Alabama
and ChatDfhooga Railroad Company,
it wits provided that the endorsement
should be placed upon the second
mortgage bonds, second to the lien of
the state of Alabama, for $15,000 a
mile. Acting upon that endorsement
the legislature declared it invalid in
1875. There was, further, no evi
dence to show that there was that
proper amount paid in cash by private
parties.
The next was the Bainbridge
Cuthbert and Columbus. Sixty thou
sand of these bonds were issued.
They were to be issued when twenty
miles of the road should be complet
ed. “Not a mile of the road was ever
built, and not a dollar was invested
in it by private parties. Governor
Bullock himself afterwards said the
bonds were not valid.
Cartersville and Van Wirt.
The Cartersville and Van Wirt
bonds are next. Two hundred and
seventy-five thousand of these were
issued when only three miles of the
road had been completed. Then the
old president of this road wag turn
ed out. H. L Kimball was made pres
ident, the name of the company was
changed to the Cherokee railroad, and
$300,000 more of bonds were endorsed
on the same railroad. Governor Bul
lock placed them in Mr. Kimball’s
hands. Os this Col. N. J. Hammond
in a speech before the attorney-gen
eral of New York on the Bullock
bonds said:
“Kimball applied to Clews to give
up the Cartersville and Van Wirt
bonds, which he held as treasurer of
that road, and he declined. On the
27th of December, 1875, Governor
Conley seized that road under the au
thority granted by the statute for
failure to pay its debt, and ordered
the receiver of the state to take charge
of it. He found it levied on by a con
stable for some small debt. .He could
not take charge of it for that rea
son. It was sold by that process,
Clews & Co. filed a bill in the Unit
ed States court against the purchaser
at that sale, and against everybody
else concerned, in which they first de
clared that they held these bonds and
practically renounced all claim
against the state by reason of it, in
to substitute themselves
in the state’s place and take
prior lien away from the Cher
okee bonds. After reciting all
of these facts, they said in this bill:
‘Governor Smith has revoked the ac
tion of Conley in ths premises, so
that ths property is not now in any
respect claimed to be in the custody
of the state, etc./ as shown in the
proclamation. On that he asked, the
■ state having abandoned its right to
take charge of this road, which by the
; act was made the state’s security, to
be subrogated to the rights of the
i state as first mortgagor, so as to eut
out of holders of the Cherokee rail
road bonds, whose purchasers were
for providing that those bonde were
to be given up, and they, the Chero
kee bonds, were to become first mort
gages against the road. All the par
ties being heard, a decree was taken
by Clews in favor of the Van Wirt
road bonds, Judge Woods declaring
that the Cherokee bonds were invalid.
And the road was sold and bid in
by Clews. He could have stood off
and relied on the slate’s endorsement.
But he preferred to come in and take
the state’s place by subrogation. He
foreclosed his bonds more than ten
years ago. ceased to make any claim
on the state and took, charge of ths
road as the man who bought it.”
* Brunswick and Albany.
Next in order comes the Bruns
wick and Anbany railroad.
Os this, Mr. Pat Calhoun, speak- .
ing before the attorney-general of
New York, said:
“The Brunswick and Florida rail
road was chartered in 1835. Prior
to the war it had built sixty-five miles
of its road. Some of its stockholders
lived in the north, some in the south.
In 1861, when Georgia seceded, she
passed an ordinance in her secession
convention that she would protect
the property of aliens. After the war
began, and after Georgia had left the
union:, the stockholders that lived
in the state reorganized the affairs
of the company and got a charter
giving them power to manage and
control the old company and changed
its name from the Brunswick and
Florida to the Brunswick and Albany
Railroad Company. Subsequently
these southern stockholders passed a
resolution calling upon Governor
Brown for advice. The resolution de
clared in its preamble that the con
gress of the Confederate States, and
that under the ordinance of the se
cession convention, and the act chang
ing the name the board of directors
believed the property of the com
pany could only be sequestrated by a
Georgia legislature.”
Whereupon the governor pro
claimed :
“Therefore, in pursuance of the
above resolution, and considering it
a military necessity that the said
road should be taken possession of
and controlled by the state authority
as a means of public defense, I have,
as governor of Georgia, commander
in-chief of the army and navy of
this state, and of .the militia thereof,
taken charge of said railroad and to
hold and manage the same.”
“In the way the road, passed into
the possession of the state of Georgia,
Governor Brown’s action yas with
out warrant of law. It was not re
quested by the stockholders, they
merely asked his advice. He took the
property fcr war purposes, and his
action can only be justified on this
ground* Georgia got possession of
the road the purpose of military
defense; but the Confederate govern
ment eame along later and she want
ed some of that iron. The result was
South Georgia Farms and
Decatur County Tobacco
Lands for sale; for descrip
tive price list write to R. L.
Hicks, Real Estate, Bain
bridge Ga