USA > North Carolina > History of North Carolina: North Carolina since 1860, Volume III > Part 10
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The plunderers had felt it wise to delay operations until republican success in the nation was assured, but with the elec-
119
HISTORY OF NORTH CAROLINA
tion out of the way, they eagerly awaited the meeting of the legislature. Although the credit of the state sadly needed rehabilitation, the legislature ignored the question entirely and gave itself over largely to the schemes of the spoilers. The policy of state aid to internal improvements had been adopted long before the war and practically all the debt of the state had been incurred in this way. In 1866 and 1867, in spite of financial depression, new bonds were issued. The war had shown nothing more conclusively than the need of greater and improved transportation facilities, and those who advocated the policy of state aid therefore naturally expected the new government to continue it. The plunderers, therefore, had not the task of forcing the acceptance of a new idea or policy; they had only to make use of an established system and were thus able for a time to conceal the real character of their operations and to use honest men as tools to accom- plish their evil purpose.
On January 1, 1868, the total debt of the state, excluding of course the repudiated war debt, was $13,724,900 with ac- crued interest of nearly $2,000,000. Over $1,000,000 more was in doubt since, although not repudiated by the convention of 1865, it had not been specifically recognized. The bonds were selling at seventy.
The convention, which was attended by a quiet but influ- ential lobby, began the work of plundering the state. Bonds of the Wilmington, Charlotte and Rutherford Railroad, to the amount of $1,000,000 were endorsed. The Northwestern Railroad was planned to extend from Lexington and Greens- boro to Salem and thence to the northwestern boundary of the state, and the state agreed to make a loan of $10,000 a mile as fast as the grading of ten-mile blocks was completed. The bonds of the Chatham Railroad, to the amount of $1,200,000, were taken in exchange for an equal amount of state bonds, and the road was given all the state's interest in the Cape Fear and Deep River Navigation Company between Northing Dam and Gulf Dam. The Western Railroad received $500,000 in state bonds in exchange for an equal amount of the bonds of the Wilmington, Charlotte and Rutherford which had been
120
HISTORY OF NORTH CAROLINA
given to it by the state. Money controlled practically all this legislation.
The new constitution forbade the legislature to contract any new debt except to supply a casual deficit or to suppress invasion or insurrection, unless in the same bill it should levy a special tax to pay the interest. It was also forbidden to give or lend the credit of the state to any person, association, or corporation, except for the completion of such railroads as were unfinished at the time of the adoption of the constitu- tion, or in which the state had a direct pecuniary interest, unless the subject was first submitted to a vote of the people and ratified by them.
When the legislature met in July a ring was organized, headed by Littlefield and George W. Swepson, the latter be- ing the paymaster of the "Ring." Beginning at this session, he allowed members of the legislature to cash their per diem at the Raleigh National Bank, of which he was a director, without charging them any discount. The "third house" aided greatly in the work of the lobby, and Littlefield's readi- ness to make loans to needy statesmen with no expectation of their being repaid, made him the idol of the carpet-baggers and corrupt scalawags, while his radicalism commended him to republicans who were not tainted with dishonesty. His charm of manner and bonhomie made his company acceptable to many conservatives who at first did not question his mo- tives or character. In the legislature, Byron Laflin was the chief member of the ring, and as chairman of the committee on internal improvement, was able to render great service to the cause. The ring not only put through its own schemes, but in a short time undertook to market bond legislation at the rate of 10 per cent of the bonds received. Only through its aid could such legislation be secured and it was thus able to make its own terms.
Swepson paid a group of seventeen legislators, most of them carpet-baggers, which included Tourgee, Deweese, Laf- lin, Foster, G. Z. French, Estes, and Abbott, approximately $134,000 of which Deweese, Abbott, French, Estes, Foster, and Andrew Jackson Jones, a native, got the lion's share. He also paid Littlefield in cash more than $66,000, most of which
121
HISTORY OF NORTH CAROLINA
was used for the corruption fund. Very little was done at the extra session for the reasons mentioned but the Chatham Railroad was authorized to exchange its bonds for state bonds to the amount of $2,000,000 and similar assistance in less amount was rendered the Williamston and Tarboro Railroad. The Western North Carolina was also divided into two sec- tions, its stock increased, and the state's liability added to.
These things did not pass unnoticed. Conservative mem- bers gave notice that the bonds were fraudulent, and hence invalid, and that they would never be paid. The rumor spread that the interest on the old bonds would not be paid. To cor- rect the impression, the October interest was paid by selling the dividend on the state's interest in the North Carolina Railroad, which was paid in bonds of the road, to Swepson and A. J. Jones at a price far below par or even market value. Swepson knew ahead what was to be done and was able by speculation in state bonds to clear a large sum. Of this he paid Treasurer Jenkins $600.
The Williamston and Tarboro and Chatham roads received their bonds and gave mortgages which were invalid for lack of revenue stamps and for failure of registration with the secretary of state. The Chatham mortgage included lands undescribed which the road did not own. A large number of the bonds were sold at a very low price and an inconsiderable amount was spent upon the roads. So clearly were the bonds invalid that they were excluded from the Stock Exchange.
Littlefield was made state proxy by Holden who regarded the state's interest in the railroads only as a political asset of the republican party and used it as such. He was directly responsible for the choice of Swepson as president of the western division of the Western North Carolina and of Lit- tlefield who presently succeeded him. He was also in a lesser sense responsible for the choice of William Sloan for the Wilmington, Charlotte and Rutherford and of A. J. Jones for the Western Railroad, although he was aware that both were notoriously dishonest and had already been exposed in stealing from the state.
When the legislature met in November for its regular session, an act was passed providing for new issues to pro-
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HISTORY OF NORTH CAROLINA
tect the old and special taxes were levied to pay the interest. For securing the passage of the act, Swepson paid Littlefield, acting for the "Ring" $240,000 in cash and a large number of bonds. At once an injunction restraining the treasurer from delivering the bonds to the Chatham Railroad was applied for and the Supreme Court on appeal declared the act unconsti- tutional because it had not been submitted to the people. The same act provided for $4,000,000 in bonds for the western division of the Western North Carolina, and a little later the stock of the two divisions was increased and the state was pledged to take three-fourths of the increase when 5 per cent of the rest was paid in. The additional stock payments were fraudulently made up and the bonds issued by Holden's order to Swepson without requiring from him his certificate that the stock was duly subscribed. The bonds were issued in various ways and only a small part was spent upon the road. A large part was expended in obtaining control of certain roads in Florida where Littlefield and Swepson planned simi- lar operations.
The Wilmington, Charlotte and Rutherford Railroad was the next to profit, receiving $4,000,000 in state bonds, most of which was squandered without benefit to the road.
Another act incorporated the University Railroad, appro- priating $300,000 in construction bonds. The directors had been appointed by the governor and a president elected, when the attorney-general pronounced the act unconstitutional. The matter was carried to the Supreme Court which unanimously agreed that the act was invalid. The court differed as to the extent of the decision, the chief justice holding that all the railroad bonds were invalid. While they argued this ques- tion they talked of the case very freely and the matter became widely known. A rehearing was demanded and the court handed down a decision confined to the case before it. Many accusations were made against the Supreme Court at the time, but there is no evidence to show improper conduct on the part of any particular member of it. Swepson, on one occasion, tapped his pocket and said that he had there an- other decision which had been prepared by the court and that it had cost him a large sum of money to prevent its being ren-
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HISTORY OF NORTH CAROLINA
dered, but his word carries little weight. The following tele- gram, sent him two days before the case was first argued, casts an unpleasant light upon the general situation of affairs :
"Raleigh, N. C., June 24, 1869. "George W. Swepson, "Baltimore, Md.,
"The case will be tried, but the opinion of the Court re- served until your return; this all I can effect.
"W. W. HOLDEN."
A few days after the passage of the University Railroad act, the charter of the Western Railroad was amended and the state treasurer was directed to exchange $500,000 in bonds for an equal amount of stock in the road, to issue an equal amount in exchange for the bonds of the Wilmington, Char- lotte and Rutherford Railroad, which had been paid to the former road by the state, and, for the purpose of extending the road to Wilkes County, to make an additional stock sub- scription of $500,000, making a total authorized issue of $1,500,000. To pay the interest, two special taxes were levied, one of one-eightieth of 1 per cent and one of one-fortieth of 1 per cent. The act provided for the retention by the treas- urer of 180 of the bonds as security for the payment by the road, during the first two years, of $90,000 for inter- est, both of which sums were to be repaid at the expiration of that time. Under the provisions of this act, A. J. Jones; the president of the road, received 1,320 bonds. Fifty-five of these were sold by New York brokers for $24,255, and, from that amount, 75/8 of 1 per cent of the face value of the bonds was charged as commissions, so that the company only re- ceived $20,893.13. The rest of the bonds were deposited with certain brokers in New York, by whom, under the instruc- tions from Jones, part were hypothecated in an attempt to raise money to buy bonds on margin to bull the market. A pool was formed for this purpose by Swepson, Littlefield, Sloan, Jones, and a number of bondholders, including T. P. Branch, a Richmond broker, S. McD. Tate, T. W. Dewey, and R. Y. McAden. Treasurer Jenkins and Governor Holden were present in New York when it was formed and were frequently
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HISTORY OF NORTH CAROLINA
consulted by the members. At the same time it was decided by the railroad presidents that Henry Clews and Company should succeed Soutter and Company as the financial agents of the state. To this, Governor Holden consented and the change was made. Soutter and Company had been paid $1,000 a year as compensation for their services.
The Western Railroad was next assisted with a total of $1,500,000. A. J. Jones received $1,320,000 and squandered all of it, spending a long time in New York where he is known to have lost a large part in gambling.
The interest on the debt due in January and April, 1869, had not been paid and the bondholders began to complain loudly. Governor Holden was overwhelmed with correspond- ence from the North, where practically all the bonds were held, demanding payment, and it was clear that there was no chance for the bonds to rise in price unless something was done to satisfy the holders of those already sold. Swepson and Jones now agreed to advance the money to pay the inter- est on the special tax bonds, and Jenkins advertised that the April and October interest would be paid, and Governor Hol- den wrote an open letter to Clews and Company in which he said that the state would pay all its debts, especially the spe- cial tax bonds. The railroad stock owned by the board of education was now sold at a very low rate, and the proceeds, $150,000, along with the money received from the land scrip, $125,000, were invested in special tax bonds.
Two million dollars were subscribed to the Oxford Branch of the Raleigh and Gaston, $2,700,000 to an extension of the Williamston and Tarboro, but both acts were clearly uncon- stitutional and no bonds were ever issued.
The Atlantic, Tennessee and Ohio Railroad was aided to the extent of $2,000,000. Sloan and Laflin opposed the bill and were paid $20,000 apiece for silence. Deweese then se- cured an injunction and Judge Watts was paid $5,000 to grant it. A compromise which was the object of the suit was then reached at a cost of $163,000 in bonds. The rest of the bonds were finally returned to the state along with those received by Fowle and Badger as a fee for legal services, which they had
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HISTORY OF NORTH CAROLINA
returned to the company when they saw that blackmail was the object of the suit.
Two other acts chartered the Eastern and Western Rail- road with an appropriation of $2,000,000 and the Edenton and Suffolk with $850,000. Both were unconstitutional and no bonds were ever issued.
These acts ended the work of the ring in securing legisla- tion. By this time the whole state knew what was being done and the people were greatly roused. By the end of the sum- mer of 1869, talk of repudiation was general and when the legislature met in the autumn no further legislation was pos- sible and the presidents of the various roads were directed to return all unsold bonds to the treasurer and to account for the rest. A little later all the acts in aid of railroads were repealed.
The following tables give the available information in a condensed form:
Road
Amount authorized
Issued
Returned
Chatham
$3,200,000
$3,200,000
$1,650,000
Western N. C. (W. D.)
6,387,000
6,387,000
None
Western N. C. (E. D.) ..
613,000
613,000
None
Williamston & Tarboro
300,000
300,000
None
W. & T. (branch line) ..
2,700,000
None
None
University
300,000
None
None
Northwestern
2,000,000
1,080,000
1,080,000
Western
1,500,000
1,320,000
None
Atlantic, Tennessee, &
Ohio
2,000,000
1,760,000
1,615,000
Wilmington, Charlotte, &
Rutherford
4,000,000
3,000,000
None
Oxford Branch
2,000,000
None
None
Eastern & Western
2,000,000
None
None
Edenton & Suffolk
850,000
None
None
Total
$27,850,000
$17,660,000
$4,345,000
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HISTORY OF NORTH CAROLINA
Road
Special tax levied
Tax on Bonds left $100 .05 outstanding $1,550,000
Chatham
1/20 of 1%
Western North Carolina
(both divisions)
1/8 of 1%
.125
7,000,000
W. & T ..
1/30 of 1%
. 0333
300,000
W. & T. (branch line)
.1/16 of 1%
. 0625
None
Univ.
1/100 of 1%
.01
None
Northwestern
1/20 of 1%
.05
None
Western
3/80 of 1%
.0375
1,320,000
A. T. & O.
1/20 of 1%
.05
145,000
W. C. & R.
1/8
of 1%
.125
3,000,000
Oxford
1/20 of 1%
.05
None
E. &. W.
1/20 of 1%
.05
None
E. & S.
1/40 of 1%
. 025
None
Total
2/3+ of 1% or
. 6683 $13,315,000
TABLE Prices of State Bonds in 1869 Highest
Lowest
Old
New
Old
New
January
.66
73
62
593/8
February
641/4
611%
62
581/2
March
64
593/4
603/4
561/2
April
. 631/2
567/8
601/4
53
May
631/4
561/4
57
541/2
June
603/4
567/8
58
503/4
July
. 591/2
53
501%
441/2
August
581%
56
491/8
49
September
. 563/4
48
501%
46
October
521/2
405/8
47
371%
November
48
381%
40
29
December
431%
331/8
413/4
281/4
1870
January
43
29
40
241/8
February
48
261%
401/2
23
March
473/4
237/8
45
221/2
April
47
223/8
461/2
21
May
Not listed
Not listed
.
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HISTORY OF NORTH CAROLINA
From the dishonest officials, little was ever recovered. Lit- tlefield, after leaving the state, went to Florida, where, rest- ing under the protection of the various governors of that state, he defied requisition papers. All refused to surrender him upon the demands of Governor Caldwell who never rested in his efforts to capture him. Once Littlefield had to surrender to the sheriff of Leon County on a charge of bribery to avoid being sent to North Carolina, and, on another occasion, Gov- ernor Caldwell sent a member of the legislature to abduct him if necessary, and he was almost captured. The legisla- ture offered a reward of $5,000 for him and two attempts were made by Floridians to win it. In both, Littlefield suc- ceeded in escaping. With Swepson, he was indicted in Bun- combe County in 1870, and requisitions were made upon the governors of New York and New Jersey for them. Swepson was arrested in Raleigh in 1871 upon a bench warrant issued by Chief Justic Pearson upon the governor's affidavit, and held to appear at Buncombe Court, but was never punished. He and Littlefield, the latter being in London, at different times made partial settlements with the Western North Caro- Jina Railroad represented by N. W. Woodfin, but the road received only a small part of what was due it. Swepson's account with the state, skillfully handled by his lawyers, Mer- ยท rimon and Ransom, steadily grew less, until it seemed wise to accept and make an immediate settlement.
William Sloan and John F. Pickrell were indicted in New Hanover for a conspiracy to defraud the Wilmington, Char- lotte and Rutherford Railroad, and the former was criminally indicted for not accounting. He was found guilty in the latter case, but the Supreme Court reversed the decision on a tech- nicality, and he escaped. A. J. Jones was convicted of not ac- counting and appealed to the Supreme Court, which, as in the Sloan case, reversed the decision. He was also criminally in- dicted in Moore County, convicted, and sentenced to ten years in the penitentiary. He appealed in this case and died before the case was heard.
A number of attempts were made to force the payment of the interest upon the special tax bonds. L. P. Bayne and Com- pany sued for a mandamus against Jenkins to compel him to
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HISTORY OF NORTH CAROLINA
pay the interest which the legislature had forbidden, but the Supreme Court on appeal dismissed the case. Later, another case was brought in the Federal courts with the same result. No attempt was made to pay interest and the matter rested for several years. The holders of the bonds, issued before the war, to aid in the construction of the North Carolina Rail- road, by suit in the Federal court secured the sequestration of the stock of the road held by the state, and thus obtained payment and security for the principal. For the rest, the state, having received little or no benefit from the railroads, was left with the burden of the bonds dishonestly issued and corruptly spent, a debt which was in addition invalid, with- out reference to the methods employed to create it, because of the fatal defect in the election of the body by which it was contracted.
These operations did not of course pass without notice. Various attempts at investigation were made, all rendered fruitless at first by the partisanship of the legislature, the majority in which saw in the attempt to punish thieves only an attack upon honored and trusted leaders of the republican party. In one case, that of the penitentiary, the fraud was uncovered. It was found that the committee charged with the location of the penitentiary had purchased from John M. Heck and D. J. Pruyn, the latter a notoriously corrupt carpet- bagger, a site on Deep River and eight thousand acres seven miles away, neither of which they owned at the time the bar- gain was made. The purchase price was $100,000. The lands were then bought by Heck for less than $11,000 and he con- tracted to sell to Pruyn for $56,000. C. L. Harris, the superin- tendent of public works, then paid that amount to Heck in bonds and the balance of the purchase price to Pruyn in the same way. The deeds were not warranted and more than six thousand acres were undescribed.
Somewhat in contrast to this was the act of the legisla- ture in forbidding the sale, without its consent of the swamp lands belonging to the board of education. This was due to the revelation of the fact that they were about to be sold far below their value for the benefit of a few interested parties, headed by D. P. Bibles, a carpet-bagger supposed to be in
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HISTORY OF NORTH CAROLINA
partnership with General Sickles. Later on a similar plot, engineered by Bibles, was formed, but C. L. Harris was in- formed that a fraud was about to be committed, shared in by two members of the board of education, probably Ashley and Menninger. He opposed the sale and relied upon the support of the governor, who, however, championed the cause of the ring, and in consequence a breach occurred between them which was never healed. The sale was prevented at the time, but was later consummated on terms very unfavorable to the state.
One of the most important acts of the session was one making it a felony to go masked, painted and disguised on the highway with the intent of terrifying any citizen. This was of course directed at the Ku Klux who were becoming active. Its passage was secured by the governor's sending the militia to Alamance with the statement that it was neces- sary to have troops there to protect the lives of loyal citizens.
By the end of the session the legislature had become a scandal, and public criticism was bitterly severe. The ma- jority of the members were either ignorant or careless and a large number were entirely corrupt. By the time of adjourn- ment repudiation was in sight. Even such carpet-baggers as Sweet and Seymour began to protest. The former had his eyes opened as to the motives and considerations behind the legislation and the latter considered the question, chiefly from the standpoint of policy and expediency. But it was too late to save the legislature from political damnation and there was little hope that any good would come from it. It had recklessly plunged the state so deep in debt that it was on the verge of avowed bankruptcy, and in doing so, it had been utterly contemptuous of constitutional restrictions. It had shown itself partisan, selfish, incompetent, and corrupt. Judge Alden told a New York banker that he could buy a majority of the body. George W. Swepson and M. S. Littlefield had bought for their joint use, among others, Abbott, Laflin, Estes, Foster, Hyman, Sinclair, Stevens, J. H. Harris, and Rev. Hugh Downing. These facts were not clearly proved as yet, but they were suspected, and the result was fatal to the ma- jority. At the beginning of their term they had presented a Vol. III-9
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HISTORY OF NORTH CAROLINA
united front to the conservatives who were ignored in debate or silenced by the call of the previous question. This condi- tion of affairs was now soon changed. Friction among them- selves increased until the majority was apparently about to break up into hostile cliques. The deportment of the mem- bers was never good and became worse as the session pro- gressed. Abusive and profane language was common in debate and there were occasional personal encounters.
Although there was no election in 1869, political interest was strong and the conservatives gained ground in public sen- timent. In the summer B. F. Moore published a powerful pro- test against political activity on the part of the judges, writ- ten by himself and signed by 108 of the leading lawyers of the state. This action was not intended to have political sig- nificance but only to serve as a warning. But it could not fail of political effect and when the court met in June, the chief justice declared that "the case appeared as if the bar had been lying in wait to murder the judiciary," and directed the service of a rule upon all the protesting lawyers who practiced before the court to show cause why they should not be silenced for contempt. By agreement the rule was served only upon Moore and two others who while admitting disap- proval of the conduct of the judges, pleaded a lack of intent to bring the court into contempt, upon which the chief justice, after administering a scolding to the lawyers, ordered the rule discharged. The action of the court did not strengthen it, many, even of the republicans feeling that it had erred badly.
The republicans were beginning to lose the coherence which had at first characterized the party. The conservatives saw this and were quick to take advantage of it. No opportunity was lost to widen any breach that was visible, nor was the battle against the radicals lessened at all when the legisla- ture adjourned. The most influential agency in this contest was the Sentinel, edited by Josiah Turner with an enthusiasm for polemics that seemed little short of diabolical to his oppo- nents. He was a man of positive genius for political warfare, sparing not and caring little where he struck. Quick-witted, ingenious in putting an opponent on the defensive and keeping
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