ARKANSAS. 



43 



struction of railroads. The act further pro- 

 vided that the roads should pay the interest 

 and principal of the bonds, and in default of 

 either they were to be seized by the State 

 Treasurer, and their income and revenues se- 

 questered. Bonds were issued to the extent of 

 $5,350,000 to the following roads: Memphis 

 and Little Rock, $1,200,000 ; Little Rock, Pine 

 Bluff and New Orleans, $1,200,000 ; Mississip- 

 pi, Ouachita and Red River, $600,000 ; Arkan- 

 sas Central, $1,350,000; Little Rock and Fort 

 Smith, $1,000,000. Defaulting in the payment 

 of interest in 1873, the roads were seized and 

 managed by the State until May, 1874, when 

 the Legislature passed an act repealing the 

 sequestration law, and the roads were turned 

 over to the owners. The question as to the 

 validity of these bonds, and the liability of the 

 State therefor, came before the Supreme Court 

 of the State in 1877, and that tribunal held that 

 the act under which they were issued was un- 

 constitutional and the bonds void. (See State 

 of Arkansas us. Little Rock, Mississippi River 

 and Texas Railway, 31 Ark., 701-722.) In 

 1882 William H. Tompkins, of New York, one 

 of the bondholders, filed a complaint, in equity, 

 in the Circuit Court of the United States for 

 the Eastern District of Arkansas, against the 

 Little Rock and Fort Smith and the Little 

 Rock, Mississippi River and Texas Railway 

 Companies, in which he sought to hold the 

 roads liable for the bonds issued to them. To 

 this complaint a demurrer was filed, setting up 

 the unconstitutionally of the act under which 

 the bonds were issued, their void character, 

 and that no lien attached to the roads for their 

 payment. This demurrer was overruled by 

 United States Circuit Judge McCrary and 

 United States District Judge Caldwell, who 

 held the roads liable. Argument on the merits 

 of the controversy was had at Keokuk, Iowa, 

 before Hon. Samuel F. Miller, of the Supreme 

 Court of the United States, and Hon. H. C. 

 Caldwell, United States Judge for the Eastern 

 District of Arkansas, in June, 1883. Judge 

 Miller, in October following, filed an opinion 

 in which he held that there was no lien against 

 the roads, and consequently they were not 

 liable; while Judge Caldwell filed an opinion 

 holding that they were. In June, 1884, the 

 case was appealed to the Supreme Court of the 

 United States, where it is now pending. 



The levee bonds, to the amount of $3,000,- 

 000, were issued under an act of the General 

 Assembly of 1868, which authorized the build- 

 ing of levees and the drainage of swamp and 

 overflowed lands. In 1878 the Supreme Court 

 of the State decided that these bonds were void 

 because the act under which they were issued 

 was not passed in accordance with the pro- 

 visions of the Constitution. (See Smithee vs. 

 Garth, 33 Ark., 17.) The Constitution under 

 which the act was passed required that the 

 yeas and nays be recorded on the final passage 

 of each bill. In this instance the yeas were 

 recorded in the House, but the names of the 



nays, through an oversight of the clerk, were 

 not. On this ground the bonds were declared 

 invalid. 



The history of what are known as the Hoi- 

 ford bonds was thus given in a speech by Hon. 

 J. N. Smithee, ex-Commissioner of State Lands: 



In 1837 or 1838, the Legislature of Arkansas pro- 

 vided for an issuance of $3.000,000 in bonds, tor the es- 

 tablishment of a bank, to be known as the Real Estate 

 Bank of Arkansas. Under the charter, the bonds issued 

 to it could not be disposed of except at par ; and all of 

 them were disposed ot in that manner, except five hun- 

 dred of $1,000 each, which were issued to aid in the 

 establishment of a branch at the town of Van Buren. 

 These five hundred were hypothecated, with a certain 

 banking firm in New York, for a loan of $250,000. 

 Of this $250,000 the bank received $121,000. Before 

 it had received the remainder of the, loan the New 

 York bank suspended, but, in the mean time, had 

 transferred the bonds to a banking-house in Eng- 

 land James Holford & Co. for a loan of $350,000. 

 Soon after this the Keal Estate Bank suspended, and 

 Mr. Holford found himself with these five hundred 

 bonds, for which he had paid $350.000. Learning of 

 the suspension of the New York bank, Mr. Holford vis- 

 ited Arkansas and brought the matter to the attention 

 of Governor Yell. Governor Yell refused, in official 

 communications, to recognize the bonds held by Hol- 

 ford in any shape whatever. Subsequent Governors, 

 however, did recognize the claim, to the extent of the 

 amount of money obtained by the bank, that is, $121,- 

 000 ; and the Supreme Court of the State, in the case 

 of Peay vs. Whitney, 24 Ark. Rep., said that it may 

 be held, in well-adjudicated cases, that the State was 

 bound for the amount of money the bank received. 



Under an act of the General Assembly, 

 passed in 1869, these five hundred bonds were 

 recognized as a part of the State's indebted- 

 ness, and were funded, principal and inter- 

 est, along with the remainder of the original 

 $3,000,000 issued, and interest was paid on 

 them up to 1873. It was contended by the 

 opponents of the funding measure that the 

 State was only liable for the actual amount of 

 money obtained by the Real Estate Bank 

 $121,000, with interest; whereas the entire 

 five hundred bonds with interest were funded. 

 These bonds are embraced in the constitu- 

 tional amendment. The total amount of bonds 

 and interest outlawed by this amendment is 

 about $12,000,000. 



Under the present Constitution of Arkansas, 

 an amendment to the Constitution of the State, 

 before it can be adopted, must receive a ma- 

 jority of all the votes cast. As this amend- 

 ment failed to receive such majority in 1880, 

 the Legislature, in 1883, again submitted it, 

 and it was voted on at the September elec- 

 tion in 1884. The official returns are made 

 to the General Assembly, and will not be 

 opened until the second Monday in January, 

 1885. From unofficial but trust worthy sources, 

 in seventy counties, it is ascertained that the 

 proposed amendment received 115,253 votes 

 to 14,284 against it; and the remaining five 

 counties Arkansas, Baxter, Cross, Lincoln, 

 and Little River are known to have swelled 

 the majority. The total vote of the State 

 was 157,462 ; the amendment has been adopt- 

 ed. 



