MINNESOTA. 



591 



another act providing that the 500,000 acres of in- 

 ternal improvement lands, and the funds arising 

 therefrom, should he exchanged for the bonds and un- 

 paid coupons and other claims, at a rate which should 

 make the whole amount of lands equal to the whole 

 amount of bonds and other claims, each bondholder 

 to have a preferred choice of lands in the order in 

 which his bonds were deposited the funds derived 

 from the sale of the lands or stumpage to be treated 

 in the same way. This act was submitted to the peo- 

 ple in November, 1878, and was rejected by a majority 

 of the popular vote. 



The act under consideration is the fifth at- 

 tempt at adjustment, and provides for submis- 

 sion to the people only in the event that the 

 tribunal of five judges to which the question is 

 submitted shall decide that the constitutional 

 amendment providing that no law for the pay- 

 ment of the principal or interest of the bonds 

 shall take effect until approved by a majority 

 of the popular vote thereon is valid. 



The questions involved were submitted to 

 the Supreme Court during the summer, which 

 decided the act to be void, on the ground that 

 it contained a delegation of legislative power 

 to the tribunal, whereas the Legislature should 

 itself have taken the responsibility of deciding 

 upon the validity of the amendment. But the 

 Supreme Court at the same time held the 

 amendment of 1860 invalid, as contravening 

 that clause of the Federal Constitution which 

 prohibits any State from impairing the obliga- 

 tion of contracts. The court held that the re- 

 quirement that all acts on the subject should be 

 submitted to the people affected, not merely the 

 remedy, but the obligation. This decision left 

 the Legislature free to settle the question of 

 these bonds without submitting its acts to the 

 people. The Governor accordingly called an 

 extra session, which began on the llth of Oc- 

 tober, and continued for thirty-nine days. The 

 Governor, in his message to this session, says 

 as follows : 



My individual preference is that every dollar of the 

 debt represented by the Minnesota State railroad 

 bonds slii mill be paid in full, principal and interest. 

 I believe that no course short of this is consistent 

 with the honor and integrity of a sovereign State, so 

 far aa relates to its own voluntary action. But inas- 

 much as the holders of the bonds have upon their own 

 motion proposed an adjustment upon more favorable 

 terms, an opportunity is presented! for discharging the 

 whole debt oy partial payment, without any necessary 

 compromise of our good name. 



The practical question simply is whether we shall 

 now save some $4,000,000 to the State without loss of 

 honor, or incur the reproach of repudiation, keep 

 going a source of constant annoyance and an oppor- 

 tunity for political jugglery, and in the end pay the 

 debt m full ; for it can not be possible that an intelli- 

 gent and progressive people, with moral and religious 

 convictions, can refuse the final payment of an honest 

 debt. An individual who does this while able to pay, 

 justly incurs the scorn of his honest neighbors. A\ hat 

 must he thought of a prosperous State that does it, 

 UMII^ its sovereignty as its shield? 



The holders of more than $2,000,000 of the whole 

 issue of $2,275,000 have deposited their bonds with 

 the State Auditor, accompanied with a written agree- 

 ment to accept, in new bonds or cash, 60 per cent of 

 the nominal amount of such surrendered bonds and 

 coupons, in accordance with the act of last March. 

 Many of the bondholders have demanded the return 



of then- bonds since the decision of the Supreme Court, 

 which demand has been refused on the ground that 

 the contract remains binding upon the parties, the 

 decision having affected only the means of perform- 

 ance, and that the bonds can not fairly be withdrawn 

 until the Legislature shall have taken action in the 

 matter. Others, while still offering liberal conces- 

 sions, express their unwillingness to adhere to their 

 original proposition in view of the decision of the 

 Supreme Court and the marked enhancement of the 

 value of their bonds ; but Mr. Selah Chamberlain, the 

 holder of about one half of these bonds, has adhered 

 to hia contract and renewed his proposition to accept 

 50 per cent of the amount in full satisfaction of his 

 claim, on the express condition that the adjustment 

 be consummated during the present year ; and there 

 is reason to believe that most of the other bondholders 

 will adhere to similar terms of settlement if speedily 

 concluded. We have thus an opportunity to honora- 

 bly settle this debt upon terms ot rare liberality ; and 

 it is because the soundest expediency and the impera- 

 tive demands of justice thus unite to require prompt 

 action that I have felt it my duty to convene you in 

 extra session. 



The act of the last Legislature, proposing an amend- 

 ment to the Constitution devoting the proceeds of the 

 internal improvement lands to the payment of the ad- 

 justment bonds has been rendered inoperative by the 

 decision of the Supreme Court. It will, therefore, be 

 necessary to promptly readjust and re-enact its pro- 

 visions to conform to the new action to be taken, in 

 order to submit the proposed amendment to the peo- 

 ple at the approaching general election. The average 

 price realized thus far for the lands sold is about $7 per 

 acre, and the fund from such sales already amounts to 

 $800,000. In view of the rapid settlement of the 

 country it is believed that the total sum which will be 

 finally realized from the sale of these lands will reach 

 $4,000,000, a sum nearly or quite sufficient to pay 

 the whole indebtedness without recourse to taxation. 

 That there may be no wrong impression on your 

 minds regarding the whole amount due on these bonds, 

 I would say that by a former decision of our Supreme 

 Court, past-due coupons draw interest, as well as the 

 b'onds to which they are attached, and should interest 

 be computed in accordance with this decision, the 

 whole debt would amount, on December 1, 1881, to 

 about $8,200,000, and should the pending proposition 

 be consummated, the saving to the State" will thus be 

 about $4,000,000. 



The Legislature promptly passed an act in 

 accordance with the Governor's views, the 

 first two sections of which are as follows : 



SECTION 1. Any holder of said Minnesota State 

 railroad bonds \vlio desires to avail himself of the 

 provisions of this act, must deposit his bonds and 

 coupons with the State Auditor, accompanied by an 

 agreement in writing, obligating himself to accept in 

 lieu of said bonds and coupons and in full payment 

 and satisfaction thereof, fifty per cent of the amount 

 nominally due upon said bo'nus and coupons, less any 

 deductions hereinafter provided for, in cash, or in new 

 bonds of the State, as provided for in this act : Pro- 

 vided, however, That wnerc there has been a compli- 

 ance with the requirements of section one (1 ) of the 

 act entitled " An act providing for the adjustment of 

 the Minnesota State railroad bonds," approved March 

 2, A. D. 1881, the same shall stand ana be considered 

 as a compliance with the provisions of this section. 



SEC. 2. It shall bo the duty of the Governor and 

 State Auditor to cause to be prepared new bonds of 

 the State, which new bonds shall be stvled Minnesota 

 State railroad adjustment bonds, and "bear date July 

 first (1st), one thousand 'i_'ht h;mdred and eighty- 

 one (1881), and shall be of the denomination of one 

 thousand dollars ($1,000) each, and shall be, and on 

 their face shall be made payable after ten years and 

 not more than thirty voars from their date, at the 

 option of the State of Minnesota, in the city of New 



