men mentioned by him, had sold Tennessee bonds "short," and desired to depress them; that some of them consulted the "realms of spirits," with the assistance of a "female spiritualistic medium," to get information not accessible through terrestrial senses, and as to how to manage in order "to stand well before the court at home." They got the information desired and followed it scrupulously, thereby making themselves some poorer and enriching a high State official some thousands. Another witness before the committee, distinguished in his antecedents and connections, refused to answer pertinent questions propounded by the committee, on the ground that he knew of no law, "statute or organic," compelling a man to criminate himself, or to divulge information and facts received as an attorney, or to abuse private confidence. A number of the same manipulators were on hand during the fall session of 1868. They wanted "State aid." Another omnibus bill was started on its passage, and passed one branch of the Legislature. The fellows that wanted "State aid" seemed to get furious over opposition. They wanted to buy men, like mules. Some members, and a vigilant and faithful Comptroller, almost at the peril of his life, defeated the shameless job. The foregoing is not even a brief summary of half the evidence. It will all bear reading. But leave out the testimony of witnesses. Appeal to the official records made by corporations themselves. They will demonstrate, beyond cavil, gross violations on the part of many of the laws, authorizing the issuance of bonds to them. We offer herewith, as a part of this report, marked Exhibit A, a tabular statement showing the length of each road in the State, the number of bonds received by each, both in road and bridge aid, and the amount of bonds each was entitled to receive. It also shows the amount of capital stock subscribed. We call special attention to this tabular statement. The great disproportion between the number received by many, and the number they were entitled to, as well as the small amount of private stock subscribed and paid in amounts to an official demonstration on their part of a fraudulent disregard of the law. But it is said that the act of 1869, and of 1870, under which the railroads were allowed to retire their ineebtedness to the State, have operated to cure, or to estop inquiry, into all these matters. This committee has before said, and now repeats, that no opinion is intended to be expressed as to the validity of the payments made by solvent or other roads under these acts. Nor is it their desire or intention to make war upon any corporations. But they intend the truth to be known as far as they are able to discover it, and to announce it. Admitting fully the legality of the payments made by the roads under the latter act, for the purposes of discharging the statutory lien of the State, we deny that this act or the act of 1869 operates as an estoppel against the people as to the outstanding debt. As matter of fact, all the railroads except the Louisville & Nashville Railroad Company (which paid its indebtedness to the State in 1865), so far as known to your committee, were in favor of the act of 1870. The act of 1869 restricted payment to bonds of the same series as those issued to the road or roads paying. This being inconvenient the railroads required the further act of 1870. The Legislature of 1869-70, early in its session, instituted an investigation into the frauds connected with the issuance of the bonds to railroads. That investigation disclosed gross frauds in the reception, use and disposal of bonds by a number of railroad companies. The committee that conducted the investigation, it seems, had determined to submit a separate bill as to each road that had fraudulently obtained bonds, declaring the bonds illegal and void. At or about this time a movement looking to the reconstruction of the State became very active, and it was urged in favor of the movement that the Legislature then in session intended to repudiate the State's obligations and bonds incurred and issued under Gov. Brownlow's administration and Gov. Senter's. The danger of reconstruction became so alarming that Dorsey B. Thomas, the Speaker of the Senate, and W. O'N. Perkins, Speaker of the House, in their official characters, and at the request of a large number of people and Representatives, in connection with others, went to Washington City to prevent the threatened overthrow of the existing State Government. It is also intimated, if not proven, in the testimony, that a number of the holders of Tennessee bonds were then in favor of reconstruction, giving as a reason that with the State under the military control of the United States it would be forced to levy a sufficient tax to meet the interest due them, and to provide for the payment of the principal of their bonds. The Speaker of the State Senate, while at Washington, made it prominent in his argument against reconstruction that the State intended nothing wrong, and that there was an honest determination to restore the credit of the State; and as a fact, he did this to rebut or neutralize the strength the movement seemed to derive from the fear of the repudiation of these fraudulent bonds. It is further in proof that in view of this threatened reconstruc tion and the existence of the act of 1870, and the construction put upon it by the railroads and the officers of the State, further legislative action, then, towards repudiating or rejecting fraudulent bonds was paralyzed. It is further proven that the act of 1870, was either drawn in New York, or by a railroad attorney. It is further proved that the act of 1869-70, chap. 47, sec. 1, as first introduced, did not have the words "legally issued" before the word "bonds," and that the words "legally issued" were inserted by the Judiciary Committee to which the bill was referred, and that these words were designedly inserted for the purpose of protecting the State from receiving or becoming responsible for the fraudulent bonds outstanding. That committee, or a portion of it, thought that with these words inserted the act would afford a better protection to the State against fraudulent bonds than the act of 1868-9, chap. 38, sec. 1, for the latter act allowed the railroads to pay their debt to the State "in the bonds of the State." The proof is further that these words "legally issued" were inserted not only to protect the State from receiving fraudulent bonds, but also to enable the State, if she desired, after all dangers of reconstruction had passed, to take such other and affirmative stepts to get clear of fraudulent bonds as she deemed expedient. In view of these facts and in view of the argument herein before advanced as to the funding act of 1873, we are of the opinion that this act of 1869-70 presents no estoppel. It is claimed, however, that the ante and post-war bonds were sold and purchased without distinction. Your committee cannot concur in this assertion. A plain fact refute it. Of the fourteen and odd thousand ante-war railroad bonds, nearly 9,000 are still out. Of the thirteen and odd thousand post-war railroad bonds, only a little over 2,000 are out. In addition, it is in proof that one newspaper was paid a large sum of money by a railroad president for its vigorous service in depreciating the post-war bonds, and at least one other leading paper in the State was approached to be engaged in the same work. The value of this service to the railroad consisted in this, that if the post-war bonds were depressed, they could thereby be bought for less, and that with them the debts of the roads could be paid off at less cost. The committee will call the attention of the General Assembly to one other matter and close this report. Under the act of May 24, 1866, incorporating the Tennessee and Pacific Railroad Company, a number of turnpike companies in East Tennessee were chartered. Several sections of the act assigned the stock of the State, in the East Tennessee & Georgia Railroad, amounting to $425,000, as reeited in the act, to these turnpike companies, giving to each a specified amount. In addition, over a hundred bonds of the State had been issued since the war to turnpikes in that section of the State. Yet with all this aid, supplemented by private subscriptions, only about 20 miles of inferior constructed turnpikes can be heard of in that part of the State. Some of the pikes are a mile or more long. Some less, and as your committee learned, a great deal that was done on them was done by parties paying their private subscriptions in work. Your committee tried to trace this railroad stock to its present ownership. We had before us the Secretary and Treasurer, or the book-keeper of the East Tennessee, Virginia & Georgia road. He promptly furnished us a statement showing when and in what amounts to each, etc., stock had been assigned to the turnpike companies. But when the committee propounded the question to know who owned the stock now, he excused himself from answering until the authorities of the road could be consulted. The chairman of the committee, before leaving Knoxville, addressed him a note, asking a response to the question, but he, in a note, declined to do so, stating that he was acting under advice of the company's attorney. Your committee is at a loss to conceive what good reason can exist for this refusal. The letter of said Secretary and Treasurer is filed with the evidence. Your committee are of the opinion that this turnpike absorption of the State's stock should be looked to by the proper officer of the State, and, if the State's interest has not been entirely lost, recover what he can. The committee desire, in concluding their report, to tender their thanks to the Comptroller and the Secretary of State for the uniform courtesies and for valuable assistance rendered. |