ARKANSAS. 



19 



$5,078,692. Of this amount, $2,495,500 bears 

 interest at the rate of 6 per cent., and $22,000 

 at the rate of 5 per cent, per annum ; $6,200 

 bears no interest, and will be redeemed before 

 the Legislature meets. The remaining $2,554,- 

 992 is unpaid interest accrued." 



In his message to the Legislature at the be- 

 ginning of the year, the Governor says : 



By reference to the reports of the Treasurer and Com- 

 missioner of State Lands, it will be seen that both rec- 

 ommend the repeal of the donation or homestead 

 law, and that the forfeited lands, which now amount 

 to over 3,000,000 acres, be reserved, or sold only for the 

 extinguishment of the State debt. This would seem 

 to be a wise provision, and I most heartily concur in 

 its recommendation. 



Among the first things, however, to determine is, 

 of what does the just and legal debt consist ? The le- 

 gality and justness of a portion of this debt have been 

 questioned, and much bad feeling has been engendered 

 among the people of the State. Among all classes. 

 however, there is a disposition to act honorably ana 

 honestly by the State's creditors. The mass of the 

 people are honest and in favor of honest methods, 

 and the one important point first to determine is, 

 whether common honesty demands payment of any 

 portion of our disputed indebtedness. 



Repudiation, in any form or in any shape, can be 

 fraught only with evil. No constitutional enactment 

 can do away with the State's legal responsibility for 

 paper issued by her. 



The history of the issuance of $5,300,000 of bonds 

 to aid in the construction of railroads is well known. 

 The bonds were issued to the roads, taken to New 

 York and other commercial centers, sold, and the pro- 

 ceeds used by the roads to aid in their construction. 

 When this was done, there was a contract between 

 the roads and the State that the latter should be held 

 harmless. These bonds are now in the hands of inno- 

 cent purchasers. Because the Supreme Court of the 

 State has declared the act under which the bonds 

 were issued illegal, and as the General Assembly, at its 

 extraordinary session in 1874, repealed the act pro- 

 viding for the sequestration of the earnings of the 

 roads, in default ot payment of interest, it is contend- 

 ed that the innocent holders of the bonds should re- 

 ceive nothing. So far as the State is concerned she 

 can not be expected, nor is it assumed, by even the 

 bondholders, that she ought to pay any part of this 

 indebtedness. But does she not owe a duty to the in- 

 nocent purchasers of her bonds, to see that they are 

 protected, and that the roads are compelled to comply 

 with their contract ? The State has the power, through 

 the Legislature, undoubted and supreme, to tax the 

 railroads in an amount sufficient to meet the yearly 

 interests and eventually the principal of these bonds ; 

 this, irrespective of the unconstitutionality of the law 

 under which they were issued. 



Since commencing my message, the Circuit Court 

 of the United States, for this State, has rendered a de- 

 cision in regard to these railroad aid bonds, sustain- 

 ing this view of the case, and therefore strengthens 

 this my recommendation. 



I desire to again emphasize all that has heretofore 

 been said on the subject of the judgment held by citi- 

 zens against the State, on account of property taken 

 from them during the pending of martial law'in sev- 

 eral counties in 1869. Provision for the payment of 

 this debt should be made at once. 



Inaugural Views. Gov. Berry was inaugu- 

 rated on the 13th of January, and in his ad- 

 dress expressed the following views: 



The fact that there are outstanding "bonds repre- 

 senting some $13,000,000, which are claimed by the 

 holders to be a valid obligation of the State, and 

 which are believed by a large portion of our people to 

 be fraudulent and void, has proved a constant source 



of annoyance and embarrassment. The best interests 

 of the people demand that the question of the State's 

 liability for these bonds be definitely settled. If they 

 constitute a just claim, we ought to provide for their 

 ultimate payment. If they are not a legitimate charge 

 against the State, and we do not intend to pay them, 

 common fairness requires us to say so, and say it in 

 such a manner that we can not be misunderstood. 

 Two classes of these bonds, those known as the rail- 

 road aid and levee bonds, amounting to more than 

 flO, 000,000, have been declared by our Supreme 

 Court to have been issued without authority of law, 

 and not binding upon the State. The remaining 

 class, known as the Holford bonds, are based upon a 

 claim which the authorities of the State refused to 

 recognize when first preferred a claim the people 

 have never admitted to be just, but upon which they 

 have already paid all that, under any view of the 

 circumstances, could be claimed was either legal or 

 equitable. In a matter of this magnitude it seems to 

 me eminently proper that the question should be 

 withdrawn from the General Assembly and placed 

 directly before the people. Under our present sys- 

 tem the railroad property practically escapes taxation, 

 the total amount of State taxes upon railroad property 

 upon last year's assessment, excluding lands, being 

 only $2,400. Some of these railroad corporations 

 claim to be exempt from taxation by their charters. 

 This claim should be thoroughly investigated. 



The Governor proposed a new revenue law, 

 " that will compel assessors to assess all of the 

 property of the State at its true value ; that 

 will impose upon railroad property its just 

 portion of taxes, levied for the benefit of all ; 

 that will prevent tax-dodging," etc. 



Railroad Aid Bonds. The railroad aid bonds 

 were issued by the State under the act of 

 1868. They were accepted and used by five 

 railroad companies, to which the following 

 issues of bonds were made : 



Little Rock and Fort Smith ... ... $1,000,000 



Little Rock, Pine Bluff, and New Orleans 1,200,000 



Mississippi. Ouacliita, and Red Kiver 600,000 



Memphis and Little Rock 1,200,000 



Arkansas Central ; 1,850,000 



Total $5,350,000 



To which sum must be added twelve years' 

 interest at 7 per cent. 



The Memphis and Little Rock Railroad 

 Company owns and holds $938,000 of the $1,- 

 200,000 bonds originally issued to that corpo- 

 ration, and the bonds owned and held by the 

 Little Rock and Fort Smith Railway Company 

 amount to $644,000. These bonds were pur- 

 chased years ago upon advice of counsel, at 

 very low figures, with a view of hedging 

 against a possible decision by the courts, hold- 

 ing the railroads and not the State liable for 

 the bonds issued to those corporations. The 

 remainder are outstanding. 



Of the railway corporations above named, 

 all but one the Arkansas Central are thor- 

 oughly responsible, and fully able to liquidate 

 the claims due on these bonds. 



In the suit of Tompkins vs. the Little Rock 

 and Fort Smith Railroad Company, in the 

 United States Circuit Court, Judges Caldwell 

 and McCrary held on deinurrer that these 

 bonds were a lien on the railroads, but, at the 

 hearing on the merits, Justice Miller held the 

 contrary. Judge Caldwell dissented, and the 



