94 LAND AND LABOR. 



one. Out of the third of the new land grant bonds assigned to 

 the managers of the old road they were to take up all the out- 

 standing stock and bonds of the Backbone Company. These 

 bonds amounted at a face value to between $4,000,000 and 

 $5,000,000. They were not intended for the market, but were 

 freely distributed among Congressmen while the bill was in its 

 passage, with the agreement that they should be redeemed at a 

 certain per ceutage of their face value. The holders of these 

 bonds found that their claims would not be recognized and be- 

 gan to protest. When the syndicate, represented by ex Con- 

 gressman Sypher, came to the front with 480,000 of Backbone 

 paper, it was found that to take up all the outstanding bonds 

 and stock of the railroad that never existed, would require 

 more than the Backbone's one third of the New Orleans Pacific's 

 new land grant obligations, even though that third amounted 

 to not less than $1,000,000 in bonds. 



" This disproportion of assets to liabilities compelled the set- 

 tlement of twenty cents on the dollar. Contracts were duly 

 signed by the officers of the Backbone Company to carry out 

 this arrangement with the hungry bondholders. The obliga- 

 tions now out call for the redemption of the stock and bonds 

 of the New Orleans, Baton Rouge, and Vicksburg Railroad 

 Company in bonds of the New Orleans Pacific Railroad Com- 

 pany at the rate just indicated. The agreement to this effect, 

 signed by the President of the New Orleans, Baton Rouge, and 

 Vicksburg, is locked up in the safe of the First National Bank 

 of New York. 



"Behind the transfer of 1,492,000 acres of the people's lands 

 from one railroad company to another railroad company for the 

 nominal consideration of one dollar, there are, therefore, two 

 secret contracts, duly executed, which show the real considera- 

 tion of the transfer: 



" 1. The obligation signed by E. B. Wheelock, President of 

 the New Orleans Pacific, to hand back to William H. Barnum, 

 President of the New Orleans, Baton Rouge, and Vicksburg, 

 one third of the proceeds of the land conveyed by the latter 

 company to the former. The New Orleans Pacific Railway 



