OBSOLETE ^ AMERICAN SECURITIES AND CORPORATIONS BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF BetiTg W. Sage X891 .SI... 9963 olin The original of tinis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://archive.org/details/cu31924030207686 o 55 OBSOLETE AMERICAN SECURITIES AND COEPOEATIONS " I ILLUSTRATED WITH PHOTOGRAPHS OF IMPORTANT REPUDIATED BONDS COMPILED BY R. M. SMYTHE " I would have my bond." ** Give rae my principiil, and let me go." Merchant of Ve?iice, Act 77, Seem 1. PUBLISHED BY R. M. SMYTECE, Room 452, Produce Exchange, New York FIVE DOLLARS OR ONE POUND STERLING IN CLOTH SEVEN DOLLARS AND FIFTY CENTS OR ONE POUND TEN SHILLINGS IN FULL MOROCCO DELIVERED ANYWHERE ON RECEIPT OP PRICE NEW YORK 1904 1"'^%'^ HV'l] copymght, 1904 By R. M. SMYTHE Press of J. J. Little & Co, Astor Place, New York WANTED Old, curious obsolete bonds and stocks. Also repudiated or defaulted State, Railroad or Municipal bonds. Unsale- able remainders of Estates bought. Send a memorandum of any holdings of this character with dates of certifi- cates and other details and an offer for them will be made if possible. All unlisted and inactive securities dealt in. R. M. SMYTHE, Room 452, Produce Exchange, New York. ^Tir Mississippi Valley Trust Company N. W. COR. FOURTH AND PINE STREETS, ST. LOUIS Capital, Surplus and Profits, $8,300,000 The Business of this Company is conducted in Five Departments, as follows : 1. FINANCIAL OR MONEY DEPOSIT- Receives deposits on time, savings and checking accounts and pays interest thereon; loans money on St. Louis city real estate and listed high-grade securities; buj'S and sells domestic and foreign exchange; issues its own Letters of Credit available every- where 2. TRUST OR FIDUCIARY— Executes all manner of Trusts; acts, under authority of 1 he law, as Executor, Administrator, Trustee, Guardian, Cu- rator, Register and Transfer Agent of Bonds and Stocks, Receiver and Financial Agent for non-residents and others; becomes sole surety on bonds required by law to be given 3. BOND OR INVESTMENT— Buys and sells selected high-grade Invest- ment Securities. List of Bonds for sale on application. Commission or- ders, at usual rates, executed with promptness REAL ESTATE — Manages, Sells, Rents and Appraises St. Louis city real estate. Pays Taxes, places Insurance SAFE DEPOSIT OR STORAGE VAULTS— Rents Safe Deposit boxes in Fire, Burglar and Mob Proof Vault at $5 and upward per annum; stores, at special rates, trunks and boxes containing silverware and other bulky valuables 4. Ai,i, Business Strictin I. Drummond, President Drummoud lieiilty and Investment Co. AUQUSTE B. EWlNQ DAVin it. Francis, President D. R. Francis & Bro. Commission Co. August Gehner, Prost, Gorman American Bank Geo. H. Goulard S. E. Hoffman, Vice-President Chas. H. Huttig, President r,iird National Bank Breckinridge Jones, Vice-Prest. and Counsel Wm. p. Nolkbr, Troas. St. Louis Brewing Ass'u Wm. D. Orthwein, Prest. Wra. D. Orthwoin Grain Co. H. Clay Pierce, President "Waters-Pierce Oil Co. Joseph Ramsey, Jr., President Wabash R. R. Co Moses Rumsey, President L. M. Rumsey Mfg. Co Robert H. Stockton, President Majestic Mfg Co Julius S. Walsh, President INTRODUCTION. This manual is designed to answer a class of questions which come to all bankers, brokers, assignees, and for the use of examiners and ap- praisers and all who handle securities or loan money on them. It is also of value to incorporators who wish to avoid the duplication of names of extinct companies. Such persons receive constant inquiries as to the value of some unheard-of stock or bond, generally dated several years back and not mentioned in any of the current manuals. The usual course in such cases is to ask an outside broker what the security in question is worth, and if this cannot at once be ascertained, the stock or bond is classed as worthless, which is generally correct. It would, of course, however, be more satisfactory to be able to turn to authentic records, and thus obtain some positive and reliable infor- mation ; and customers always appreciate a knowledge of facts which is not possessed by every outside broker. Executors and receivers of large estates generally find a large block of old securities about which it is impossible to learn anything. If put up at auction such securities sell for the price of old paper, and there is always the feeling that some value may have been sacrificed for want of proper information. A glance at this manual will generally settle the question, or indicate a source from which full information can be obtained, if investigation be considered worth while. The explanatory notes which follow gi^'e somewhat detailed informa- tion concerning the subjects under the several headings, but this book is intended to be as concise as possible, and chiefly to answer the ques- tion " Is it worth anything? " This book does not pretend to give a list of all the worthless or semi- worthless securities in the United States, but it does contain some in- formation about all those which have come before my correspondents in the larger cities. The statements of value or non-value are the result of all the infor- mation which it has been possible to obtain ; and they agree with the records and researches of all my correspondents. They have been further verified, when practicable, by comparison with the records of the Depart- ments of the various States, under whose laws the extinct corporations were formed. While the bulk of the securities mentioned herein are called worth- less, this is only a comparative term, as nothing is absolutely worthless. A thousand-dollar bond which sells for one dollar or one-hundred share certificate of stock which sells for one cent per share is fairly classed as worthless ; but when five hundred such bonds or fifty thousand shares of such stock come to hand in one block, the value at these figures is five hundred dollars, which is worth considering. In the following catalogue I have marked as worthless all securities which sell for these prices, or less ; and all those which have any occasional speculative value are indicated. In most cases a note is given showing the reason for such value. No claim is made that this manual is more infallible than the current Manuals of Railroads and Securities or than Financial Newspapers, in which, as we all know, errors are not infrequent ; and the compiler will be thankful for notice of any inaccuracy. If all purchasers of this book will send their name and address to the author, they will be promptly notified of any error discovered. For niuch valuable assistance in the compilation of the work, I am indebted to Mr. James R. O'PIara, of Boston, Mass., Mr. H. B. Larwill, of Newark, N. J., i\Ir. G. A. Duryee, of New York, all of whom are well- known dealers and authorities, of many years' experience, in miscellaneous securities. R. M. SMYTHE. CONTENTS. PAGE Introduction 5 EXPLANATORY NOTES. Comparative Value of Obsolete Securities . 9 Are They used as Assets for Bankrupts.? 9 Who Buy Obsolete Securities.? 10 Void or Repealed Charters 11 Liability of Stockholders and Directors 12 Foreclosures 13 Values after Foreclosure 14 How First Mortgage Bonds are Wiped Out 15 Repudiated State and Municipal Bonds 16 Alabama Repudiated Bonds 18 Tennessee Repudiated Bonds 19 Arkansas Repudiated Bonds 19 Florida Repudiated Bonds 19 Georgia Repudiated Bonds 20 Louisiana Repudiated Bonds 21 Michigan and Minnesota Repudiated Bonds 21 Mississippi Repudiated Bonds 21 Missouri War Claim Certificates 22 North Carolina Repudiated Bonds 23 South Carolina Repudiated Bonds 23 Virginia and West Virginia Repudiated Bonds 23 Old Cuban Bonds 24 Mexican Repudiated Bonds 26 Old Bank Stocks, Notes and Miscellaneous Currency 27 Old Insurance Stocks 28 Obsolete Western Farm Mortgage, Land Investment and Irriga- tion Companies 28 Duplicate Names 29 Sources of Information about Old Corporations 29 OBSOLETE LIST. List of 25,000 Obsolete Corporations and Securities. Values indicated when any S4 MERGED LIST. List of Corporations succeeded by other companies, with name of succeeding company 752 LIST OF ILLUSTRATIONS. PAGE Cuban Bond of 1869 Frontispiece Alabama Railroad Aid Bond. Selma & Gulf R. R 18 Reverse of same bond 19 Georgia Gold Bond 20 Missouri War Claim Certificate 22 Virginia Bond of 1882. Forged Signatures 24 Mexican Woodhouse Bond 26 Railroad Currency, Bank Notes & Virginia Confederate Treasury Notes.. . . 28 Arkansas, " Holford," Bond Repudiated 76 Cuban Bond of 1872 218 Louisiana R. R. Aid Bond 414 Mississippi Planters Bank Bond 468 North Carolina Special Tax Bond 538 Ohio Life Insurance & Trust Company Coupon Stock 550 South Carolina bond. Conversion of State Securities 650 Tennessee Bond. Isham Harris Confederate Issue 679 Topeka Kansas Bond 688 West Virginia Deferred Certificate 716 Wabash & Erie Canal Stock. State of Indiana 718 EXPLANATORY NOTES Comparative Values. Of Obsolete Securities, the most hopelessly worthless are the old oil stocks issued in the sixties, and backed mostly by leases of farms. Of these stocks, a few were issued by parties owning the land, and, as there may be questions about title or possible assets, some of these stocks sell for a few cents per share. The greater number of them, when the upper oil-bearing sands ran dry, were completely wiped out. Deeper oil-bearing sands were not struck until some time later. There were no assets behind the stocks, and as the certificates are generally too ugly and inartistic to use even for the last resort as wall-paper, and as most of those that come to hand appear to have ac- cumulated a share of the crude oil they represented, they are as valueless aesthetically as they are financially. In general, at the other end of the valuation list are the straight State gold bonds which have never had an opportunity to test their merits before the courts. Next in value below such State bonds come municipal securities, which have some fighting chance. Straight railroad bonds follow, and below these generally are railroad-aid bonds issued by the various States. These, having two parties behind them, should be more valuable ; but since, often in such cases, each party declares the other responsible, the bondholder has less chance than if he had but one party to fight. Railroad stocks come next as a little more hopeless ; then industrial stocks, while next to oil stocks, and almost on even terms with them as to worthlessness, are gold and silver mining stocks. Out of something over one hundred miUions face value of such old mining stocks which have come to hand from estates in the past ten years, I have recovered exactly twelve dollars on one certificate ; and this was the last money that was ever made out of this stock. Mining stocks, however, are generally handsome, and make the best of wall-paper. Indeed, one of the most hopeful ways to make an old stock good is to use it for this purpose. Then there is a fair chance that some one will want it. There are at least two well-authenticated cases of old certificates becoming of value after being used to paper dens. Are They Used as Assets for Bankrupts? This, according to uni- versal rumor, is the great and only use which is made of worthless se- 10 EXPLANATORY NOTES curities, although, as usual in the case of such popular legends, the state- ment has little foundation in fact, but one instance of such use having ever come to my notice. If a bankrupt desires for any reason to display a lot of assets, there are plenty of both listed and unlisted securities of existing corpora- tions which can be bought for almost nothing, which cannot be traced to the buyer, and which would present a far more plausible appearance in assets than a block of old, unheard-of bonds of which but one lot may be in existence, and which can at once be traced and identified. The " assets " theory is absurd. Some years ago the newspapers printed an account of a dealer in bankrupt assets in London, whose office was lined with pigeon-holes containing packages of old bonds and stocks of no value, which were bought by intending bankrupts. The story made interesting reading and was, and is, believed by many. There is not, and never was, such a person or dealer in bankrupt assets in London or elsewhere. The dealer in assets for bankrupts is a myth, and such stories regarding dealers in old securities are generally inspired by malice or ignorance. Who Buy Obsolete Securities? This brings us to the everlasting questions, " Who Buy Obsolete Securities.? " " Why do they buy them.-* " " Of what use are such securities.'' " etc., etc. If this Manual should relieve the burning anxiety of the thousands who repeatedly ask dealers these questions, it would be a great satisfac- tion to all concerned. There is no open market, no regular quotation or continuous demand for any of these old securities. At times, without any discoverable reason, everything in this line is wanted, until the supply in sight is apparently exhausted, impossible as this may seem. At other times, for a year or more, such securities are not in demand at any price. The great and, indeed, the universal reason why people buy worthless securities is that they do not believe they are worthless, but are convinced that they have some value, or by proper action can be made of value. Of course, it is as impossible to guarantee that a block of securities shall alwajrs remain worthless as to provide that a gilt-edged investment shall forever remain out of such a manual as this. No one knows everything about securities, and the best judges make mistakes. Buyers of extinct stocks can lose almost nothing. They have the great satisfaction of getting in on the only real and reliajjle ground floor, which, strange to say, can be located only after the building has been completed and disposed of. It is often several stories lower than the original plan contemplated. Buyers have sometimes been surprised at signs of hfe in their col- lections; and if a collector ever makes a strike, it pays for a very large EXPLANATOKY NOTES 11 amount of purchased certificates, and may make him an enthusiast of the same class as the hunters after rare old postage stamps. One class of persons, then, who buy Obsolete Securities are mere speculators, who buy anything that looks cheap. Another class who are specially buyers of old bonds are those who have been directors or holders of stock in corporations, which stock has not been fully paid for up to the par value. Under the laws of some States, this makes ^the stockholder liable for the difference in price be- tween the subscription price of his stock and the par value. This dif- ference is often owing to the holders of the bonds of the company. Consequently, the stockholder, if a responsible party, may wish to have all such bonds in his own hands, although the claim may be so obscure and the bonds so scattered that there is small chance for a contest, and the bonds may be rated as practically worthless. Further remarks on this subject are made under the heading of " Liability of Stockholders and Directors." The above are a few of the uses of Obsolete Securities. Others will be indicated under the different headings, when any possible value is mentioned. Generally, in view .of the possibilities connected with extinct securities, it is a good rule never to destroy a certificate of stock or a bond, no matter how worthless it appears. It may, in time, be of good use to you or to some one else. Void or Repealed Charters. In many of the States charters and franchises are taxed, and if a company refuse or neglect to pay its taxes for over two years, the Governor makes a proclamation declaring its charter void. In some States such publication of forfeited charters is made yearly ; in others at very irregular periods. In some there is no penalty provided for non-payment of taxes or failure to report. A number of the States do not tax charters ; but the present tendency of all that do any considerable amount of incorporating is to pass more stringent laws, enforcing prompt payment of charter and franchise taxes. This matter is before the legislatures of several States at present. In the great majority of cases, when the charter has been proclaimed void for non-payment of taxes, it indicates that the company has become extinct, failed or retired from business. In some few eases it merely indicates that the company will reincorporate in some other State. In West Virginia at present many corporations are dissatisfied, and are con- sequently allowing their charters to be proclaimed void, while the busi- ness is continued under some other charter. It is generally the rule that a corporation whose charter has been de- clared void may be reinstated by the payment of back taxes and a pen- 12 EXPLANATOEY NOTES alty. This, however, is not a frequent occurrence, because corporations desiring to continue their business are always ready to keep the small fees for charters paid up, so as to avoid risking publication in the papers as delinquents. In some States there is a heavy penalty for the transaction of bus- iness by a company whose charter has been declared void. In Maine this penalty is $300, and in certain other States as high as $1,000. The fact that the charter has been declared void does not mean that the value of the stock has been wiped out, as the assets and business are yet the property of the stockholders as much as ever. It is, however, a sign of change or inactivity, and in the majority of cases is good evi- dence that the company is obsolete, or has failed in its object. Liability of Stockholders and Directors. The liability of stock- holders and directors varies in different States, and may vary in the same State, if new laws are passed or old ones wiped out. Consequently it would be useless and beyond the intention of this Alanual to go into details for each State. The matter, however, is so connected with the alleged values of defaulted securities that it cannot be left wholly un- noticed. In a general way the following statements cover the ground : Stockholders of national banks are liable for double the face value of the shares, less such proportion as has already been actually paid into the corporation for them. Of course, if the stock has originally been subscribed for at double the face value, there is no further con- tingent liability in case of failure. In most of the States, stockholders of corporations other than national banks are liable for the balance unpaid up to par of such stock, when the stock has been only partly paid or has been subscribed for at less than par. In some States liability of this kind in case of failure ex- tends to double the face value of the certificates, while in other States there is no contingent liability of this kind at all. In certain States the directors of a corporation are individually liable for the entire indebtedness of the company, if they fail to file an annual report on the condition of the company with the Secretar}' of State. In other States no such report is required, and in others where it is required there is no penalty prescribed for non-compliance with the law. The tendency is now towards revoking laws which make directors of a cor- poration liable for a mere omission to file a report or for other technical error. Certain stock certificates «tate on the face that they were issued in payment for property purchased. This was formerly supposed to make these stocks equivalent to fully paid up stock, and it was also assumed to be safe to issue any amount of stock printed in this way against a small amount of property purchased, and thus avoid liability in case of failure. EXPLANATORY NOTES 13 Recent legal action, however, has made the standing of such stock doubt- ful, and the advantage of this form of issue is, to say the least, question- able. The connection of the liability of stockholders with an occasional un- accountable demand for certain old bonds, which, having been purchased, totally disappear, is obvious. Foreclosures. The foreclosure of a mortgage on a railroad wipes out the stock and other junior securities, unless it is agreed in advance that these securities shall be allowed to participate in the property of the new company by paying an assessment or otherwise. When the stock is allowed an interest in the succeeding company, either by paying an assessment or by scaling down, a time limit is fixed within which the ex- change for the new securities may be made. After this limit in time has expired, the old stock has no interest in the succeeding company, and is classed as worthless. The many irregularities, however, which may occur in reorganization, and the impossibility of notifying each stockholder, in case the stock is widely distributed, and especially if it does not stand in the name of the party who really owns it, frequently make legal action possible on stocks which have been excluded from a succeeding company. This is the principal reason for speculation in defunct railroad stock, and this speculation often continues for many years. Litigation involving a certain reorganized New England railroad has continued for over fifty years, and is going on yet. The dates of foreclosure of the different railroads are for the most part given in the succeeding list, and these dates will generally serve to indicate whether or not the old stock is completely barred from action by some statute of limitations. It very frequently happens that the company which is wiped out by foreclosure is succeeded by another of practically the same name. In this case the date of organization of the existing company or of fore- closure of the obsolete one will determine the standing of the certificates. As an instance, there have been alternately a number of Kansas Midland and Kansas Central railroads, and also several successive Erie railroads, the stock certificates of all of which are extinct when they are dated prior to the organization of the present corporation. When the object of a date given in the list of obsolete corporations is not mentioned, such date is to be understood merely us an indication that the company was in active business at that time, and the date is generally taken from a certificate of stock which was then issued. This serves as a guide in looking up further history, if wanted. The dates of bonds are particularly important, as the speculative value often depends on the- date of maturity. For legal reasons, it is generally 14 EXPLANATOUy NOTES desirable, when proceedings are taken, to bring suit at the date at which the bond matures. Repudiated bonds for this reason are generally more valuable when approaching the date of maturity. Bonds lose nearly all speculative value or chance of legal action when the date of maturity is prior to the time allowed by the various statutes of limitations. These statutes of limitations vary greatly in the different States and also in the same State under diflFerent circumstances. The time allowed for legal action is generally longer if the document is executed with or under a seal. Consequently a seal adds value to an old security. For instance, in Alabama the term prescribed by the statute of limita- tions is six years. If, however, the document has a seal, the time is ex- tended to ten years, and in case a judgment has been procured, legal action is allowable within twenty years. The time limit may also vary according to whether the document has been issued within the State or without. For instance, the statute of limitation in California for notes, if made within the State, is four years ; but, if made outside of the State, two years; while judgments are not valid after five years. Values after Foreclosure. These are generally based on legal ques- tions which are too complicated to be considered here. They may also be based on contingent liability of the stockholder for unpaid part of the capital, or upon the ground of flaws in the foreclosure proceedings. ]\Iany other reasons are from time to time discovered, which make old bonds of some possible future value, and owners of such bonds generally have so much hope that something will turn up, as to make it more difficult bo buy them at lower figures than would seem probable. The owner of an old certificate of stock or of a bond which has been wiped out generally looks at it from an entirely different point of view from what he would if it did not belong to him. The mere fact of ownership often creates imaginary value. Reasons for value or alleged value are given in the Obsolete List under the names of the securities when such reasons are known. But many of these old securities are in demand at certain times for no conceiv- able reason. A few examples of railroad stocks which have been com- pletely wiped out, but yet are in occasional demand at low prices, are the stocks of the New Jersey Southern Railroad, the Atlantic and Pacific Railroad, the Memphis and Charleston Railroad, Toledo and Ohio Central Extension Railroad, Ohio Central Railroad, old stock of the Northern Pacific Railroad and of the Boston, Hartford and Erie Rail- road. As a noteworthy instance, the Boston, Hartford and Erie Rail- road stock, after a rest of some years at one cent per share, suddenly developed activity in 1903, and in a few weeks over 15,000 shares EXPLANATOKY NOTES 15 changed hands at from one-quarter per cent, to five-eighths per cent. How First Mortgage Bonds are Wiped Out. A frequent interro- gation received is, " How do first mortgage bonds become worthless, when they are secured ahead of the stock and everything else by a lien on the property ? " There arc a great many ways in which first mortgage bonds can become utterly worthless. Many bonds which state that they are a first mortgage are really secured by a second or third mortgage, or a first convertible mortgage, or a first consolidated mortgage, or a divi- sional mortgage, or a blanket mortgage, or some other new and improved variety of mortgage which may be described as a qualified or contingent first mortgage. A so-called first mortgage bond may be only a first mortgage on a small part of the railroad or other property, and a gen- eral mortgage on the balance. When the bond, however, is an actual first mortgage, there are numerous claims which may come before it in case of foreclosure. The largest recognized claim before the first mortgage is generally that of the receiver's certificates issued by authority of the court and bearing interest. These are often engraved like bonds, and bear coupons, and, coming ahead of the first mortgage, should be an absolutely safe in- vestment ; but ahead of them come the fees of the counsel for the trustees, and other legal charges ; also taxes, mechanics' liens and labor bills. These additional claims occasionally wipe out completely the receiver's certificates ; and sometimes even the legal talent employed is compelled to sacrifice a part of its reward. Fortunately, however, this is a rare occurrence. The costs of foreclosure in the case of a small railroad may be as low as two or three thousand dollars ; but for roads of consequence they are vastly more than this, and sometimes run to very high fig- ures, the entire sum being charged up ahead of the first mortgage bonds. It is to be remembered in this connection that genuine first mortgage bonds are very tenacious of life. Even when the greatest care has been taken in foreclosure proceedings, the foreclosure cannot be pronounced absolutely safe until it has been tested by subsequent legal attack. In one case of a road whose bonds often come to hand as worthless, the cost of foreclosure was fixed by the counsel for the trustee, a well-known trust company, at $5,000. The bondholders got a cut-rate foreclosure for $3,000, and the trustee was never properly notified. I am advised that the counsel for the trustee offers to foreclose properly at any time for the original fee of $5,000. Should his offer be accepted, the pro- ceeds of the property would go to the bonds which are now considered completely wiped out. This is given as an instance of a flaw in the title 16 EXPLANATORY NOTES which does not appear on the records, and which gives these old bonds a speculative value. It may be asked, " Why is this not taken advantage of ? " It may be at some time, but at the present moment, in this case, as in many others, not enough of the bonds can be collected in one hand or made ready for cooperation, to make the proceeding worth the cost. Besides this, the value of this road would be very doubtful in the hands of a new man- agement without the aid of the system with which it is now connected, and which, in the event of the new foreclosure suggested, might not feel friendly, and might even build a competing line which would extinguish all value of the foreclosed section. It naturally occurs to bondholders that the value of railroads de- pends so much on their exchange of business with greater connecting systems that a small road is liable to be made completely useless by antag- onizing the management of the controlling system of its locality. On the otlier hand, such a road may be built up from bankruptcy by the favor of the larger management, generallj' after they have relieved the distressed bondholders of the greater part of their load at nominal prices — nominal prices in this case frequently' meaning the lowest limit which makes it worth while to pay for the trouble of getting the bonds out of the safe deposit box or old trunk where they have been left to mildew. Many first mortgage railroad bonds are in default on their interest for years, and are quite worthless, although never foreclosed, because a search has revealed notliing worth foreclosing on. A statement of this fact by an experienced attorney can always be relied upon. Repudiated State and Municipal Bonds. It is quite impossible to get the exact amount of bonds which were issued or which are outstand- ing and repudiated by the fourteen States which have made default. In some of these States a record was never kept or one entirely false was made, and in others duplicate bonds with the same numbers were printed from the original plates and the signatures appeared to be identical on both. The officials of some States will give no information as to the amount of repudiated bonds issued under a former regime, or else have no knowl- edge of such irregular issues, and receive statements to the elfiFect that they have been issued with absolute incredulity. It is sometimes neces- sary to send bonds for examination to convince the officials that the said bonds ever existed; and not infrequently, even after this, the only result is a statement from them that the bonds are entirely unknown, that no record of them exists, and that no provision was ever made for their payment. An estimate of the total amount repudiated and defaulted upon by EXPLANATOKY NOTES 17 each State was published in the "North American Review " for August and December, 1884. It also includes the unpaid interest, which amounts to about one-third of the total. The figures of principal and interest are as follows : Repud ations of Alabama $38,812,000 00 " Arkansas 20,807,000 00 " Florida 6,280,000 00 " Georgia 13,580,000 00 " Louisiana 32,115,000 00 " Minnesota 5,960,000 00 " Mississippi 22,600,000 00 " North Carohna 48,350,000 00 " South Carohna 19,500,000 00 " Tennessee 29,850,000 .00 " Virginia & W. A a 72,220,000 00 Total $310,074,000 00 Part of this liability has been compromised by the issue of new bonds given in exchange for a percentage of the defaulted issues. Many of these new issues have in their turn been repudiated or defaulted upon, so that the figures given above are probably well inside the real amount in default. The new issues of compromise bonds were estimated in 1884 as fol- lows, and little change has taken place since then in the way of refunding : Refunding bonds issued by Alabama $7,000,000 00 " " " " S.Carolina 5,000,000 00 " " " " N.Carolina 3,500,000 00 " " " " Minnesota 2,500,000 00 Some States have allowed the bondholders to test the validity of their bonds before the courts ; some have refused to allow any legal attempt to settle the standing of such bonds. In some States, when a favorable decision to the bondholders was made, the people voted against payment, and adopted a new State constitution, forbidding any settlement what- ever of any part of the principal or interest of such bonds. Little information concerning such matters can be obtained from the States' Departments, but many books have been published on the subject, which give full information. In some cases bonds have been issued and repudiated while the State was a Territory, and the present State government is delightfully uncon- scious of the existence of any such bonds. 18 EXPLANATOEY NOTES Several of tlic larger municipal governments have the same defective memory, one of these being the capital and one of the largest cities in a State. Bonds in this case were repudiated on the plea that a structural iron works company was not a public corporation, while a grist-mill was ! In another case the bonds were, and are yet, admitted to have been properly and legally issued. After they had been in default for some time, an offer ^as made by the municipality to give the holders partial payment in other bonds at much lower rates of interest. Those who did not accept this offer were barred out forever, and the statute of limita- tions now prevents any further action. The holder of a block of these bonds wrote recently to the Treasurer of the corporation, stating that his bonds had cost him about par and were barred out, and that he would be glad to accept even a very small percentage of their face value. The official answer was, " Plenty of other people would like to also. " Yours complacently, " Treasurer." This appears to be in some States the parliamentary form correspond- ing to better known expressions in New York. In one well-known case a large Western city actually had its charter repealed, and amended its organization to escape legal enforcement of valid obligations. The conclusion is evident to all who have studied the matter that whenever the inhabitants of a bonded section of country are in need of money or desire from a feeling of antagonism to the bondholders to repudiate their obligations, there is not the least difficulty in finding endless means to accomplish their object; and then after the lapse of a little time to issue new obligations to a fresh line of investors. A little book published in 1888, called the " Art of Investing ", gives much history on this point, and is interesting reading to investors. Alabama Repudiated Bonds. The bulk of the repudiated bonds of Alabama were issued in aid of railroads. They sell occasionally at l/g^o up to 1%, or from $1.00 to $10.00 per bond. The principal railroads whose bonds were indorsed or guar- anteed by the State, or in whose favor the State issued its own bonds, were the following: Alabama & Chattanooga R.R. East Alabama & Cincinnati R.R. Mobile & Alabama Grand 'Pi-unk R.R. Mobile & Montgomery R.R. Montgomery & Eufaula R.R. <; ;2; o cq Q ; 3 H X H ^^^t '^\iV\-«. rAW*& ^tlBta an^ iSwir ^^iiteafe g,»m;j?»«3r ,,,/LJ. .,„/. COLO COEN ■V. 'f^,..a,u. „^^^ -T^. #5^ -^^ (,W ^'.i -.'Ir Jibuti, nf/ i^ttfeBfl/^-Kr Im ■- ■**^fWf(M!^^M»««*«»i!ft (f ntosjiwtrt bji thr Ststf of |Kaiin«ia. " ! ^Iniln iutUorttu " !"■ I' -Srilfhl^n.'. y'r'dU C.f il^r ^i,tJ. /imd tfih. Selma and Gulf RailSi //./ lerw* if iCfiJ rS^r'. '.ntitfuitf // li- iki. Sn Witnf ss Whi .,'..„. c S}l tA-~ £ovem