USA > North Carolina > History of North Carolina: North Carolina since 1860, Volume III > Part 27
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34 | Part 35
Reference has been made to the attempt to secure from the legislature a settlement of certain of the state bonds belonging to the second class under the compromise of 1879, the owners of which had declined to accept the terms of the compromise. Each bond carried the pledge as collateral of ten shares of railroad stock owned by the state. The claim- ants were Messrs. Schafer Brothers who owned bonds to the face value of about $250,000. Through their attorney, F. H. Busbee, they filed a memorial asking payment, but the legis- lature declined to take any action and on October 7, 1901, the State of South Dakota applied to the Supreme Court of the United States for permission to file a bill against the State of North Carolina, Charles Salter, and Simon Roths- childs, the two last representing the other bondholders, to enforce the payment of ten bonds then owned by it. No de- mand had been made upon the state for payment and it was presently to appear that this was not an oversight.
It developed later that Senator Butler, who had been in South Dakota in 1900 in the interest of Senator R. F. Petti- grew, had suggested to the latter that he might be able to get a donation for the state university. In March, 1901, probably at the instance of Pettigrew, the legislature of South Dakota passed a law providing for the acceptance of gifts of bonds
324
HISTORY OF NORTH CAROLINA
and for suit if necessary to enforce payment. In January, Senator Butler and Daniel L. Russell had been employed as counsel by Schafer Brothers and after failure to secure a settlement from the legislature, Simon Schafer donated ten of the bonds to South Dakota. In his letter appeared the fol- lowing paragraphs :
The owners of these bonds are mostly, if not entirely, persons who liberally give charity to the needy, the deserving and the unfortunate.
These bonds can be used to great advantage by state or foreign governments ; and the majority owners would prefer to use them in this way rather than take the trifle which is offered by the debtor.
If your state should succeed in collecting these bonds, it would be the inclination of the owners of a majority of the total issue now outstanding to make additional donations to such governments as may be able to collect from the repudiating state, rather than accept the small pittance offered in settlement.
The donors of these ten bonds would be pleased if the Legislature of South Dakota should apply the proceeds of these bonds to the State University, or to some of its asylums or other charities.
In October, 1900, ten bonds of the same class had been offered for redemption under the compromise of 1879 and had been cancelled by the treasurer when Governor Russell held up the transaction and notified his law partner, who was employed as counsel for some of the holders of state bonds, of the fact of their presentation. A few days later a demand was made for the return of the bonds and the treasurer was compelled to write a certificate on each that its cancellation was void. Eiglit of these were in the number given South Dakota. These facts did not become known until later.
Governor Aycock at once employed counsel to assist the attorney-general in defending the suit and it was argued in April, 1903. A rehearing was asked for by the court and was held in January, 1904.
In its complaint South Dakota asked for an accounting of all the railroad stock owned by the state and its sale to satis- fy not only the judgment prayed for, but also to pay the other outstanding bonds.
Rothschilds filed no answer but testified that his interests were all in the hands of Schafer Brothers. Salter filed an answer containing the plea that all the pledged stock should be sold and applied to the payment of the bonds.
e
HISTORY OF NORTH CAROLINA . 325
The state in its answer denied the jurisdiction of the court and also the title of the plaintiff. It claimed that the bonds had not been issued in conformity with the statute and de- nied that the mortgages were properly executed or that they had the effect of conveyance or transfer of the stock pledged. It further sought to show that the suit was not bona fide, but was the result of a conspiracy of the bondholders.
In February the court handed down its decision in favor of South Dakota, Mr. Justice Brewer writing the opinion with Mr. Justice White writing a dissenting opinion which was concurred in by Chief Justice Fuller and Justices McKenna and Day. The court ordered the marshal to sell the pledged stock at public auction to pay the amount of the judgment which was $27,400. The state then asked for an extension of time until the meeting of the legislature. This was granted and when the legislature met the governor laid the matter before it.
The democratic platform adopted in June, 1904, contained the following plank: "The Democratic party approves the settlement made in 1879, and will forever oppose any and all attempts from any quarter to set aside the settlement then made. It will abide the mandate of the courts, but it will not consent to re-open a settlement that was alike creditable to the State and fair to the holders of its securities." It was nevertheless clear that the judgment had to be paid or the stock sold and that unless some arrangement was made for the settlement of the other bonds of the same kind the state would be continually annoyed and harassed by similar suits. Consequently the claim of South Dakota was paid and the matter of the other bonds taken up. The holders made propo- sitions ranging from $395,000 to $242,000, but finally agreed to accept 25 cents on the dollar of the principal together with interest on the bonds and coupons from 1879, amounting to $982 on each bond, a total of $214,000, at which figure a final settlement was made.
Many people in the state felt relief at the payment of what was generally regarded among the informed as an honest debt. But this was largely obscured and overwhelmed by the more dominant feeling in the state which was one of
-
326
HISTORY OF NORTH CAROLINA
disgust and of anger at the method of procedure, the under- lying purpose of the suit, and the participation in it, as coun- sel, of the governor and a United States senator. Senator Butler was not a universally beloved figure before but his part in this business made him possibly the worst hated man in the history of the state and made him henceforth an object of suspicion to thousands who before had for him no particu- larly hostile feeling. He has explained his acceptance of the position as counsel plausibly and by no means unconvincingly, but his explanation has not served to dispel the dark cloud of popular disapproval, a fact which his political opponents have not been slow to take advantage of.
From the time the suit began one great blunder was made in general by the democratic politicians and the democratic press. Persistently the bonds were spoken of as "carpet- bag bonds," and "special tax bonds," and generally they were declared fraudulent. In consequence the valid bonds in question became confused in the public mind with the re- pudiated bonds, and when the Supreme Court upheld the validity of the construction bonds, many people, in and out of the state, believed that the validity of the carpet-bag bonds had been sustained. In this way, those who thus erred, some from ignorance and some deliberately, played into the hands of the conspirators who desired to enforce the pay- ment of the special tax bonds. As a matter of fact, it is a question if it would not have been wise to pay the bonds without contesting the suit in order to make as sharp a dis- tinction as possible between the two kinds of bonds. But of course the circumstances attending the suit and the motives behind it made it difficult to do this. But certainly the settle- ment by the legislature in the end was wise and just and placed the state in a better position than before for contest- ing any claim based upon the special tax bonds.
This matter concluded, the purposes of the South Dakota suit were soon made more apparent. In 1901 the North American Trust Company of New York City had begun to collect Southern bonds for collection on a 50 per cent com- mission basis. In April, 1905, advertisements for North Carolina special tax bonds, inserted by John G. Carlisle and
327
HISTORY OF NORTH CAROLINA
Jefferson M. Levy on behalf of a bondholders' syndicate or committee, began to appear in New York newspapers. A lit- tle later the following advertisement appeared in several papers, including the Evening Post :
THE COLLECTION OF STATE BONDS REPUDIATED IN WHOLE OR IN PART -
The recent decision of the Supreme Court of the United States, en- titled "South-Dakota vs. North Carolina," wherein the former state secured a judgment against the latter on ten bonds, par value, $10,000, amounting with interest to $27,400 (which has just been paid) has greatly enhanced the value of all other repudiated state bonds, because it has established the law and the procedure by which they can be enforced.
The undersigned committee, in 1901 pooled all of one issue of North Carolina bonds and originated the plan by which the above successful results were brought about, and obtained a settlement for the indi- vidual bondholders, at a little less than par, of their entire holdings of these bonds.
This committee is now ready to proceed with the collection of all other repudiated bonds of every class, of each state.
This committee has no connection with any other committee, and it knows that it alone is now in a position to avail itself of the benefits of the above mentioned decision.
Those who desire to enforce the collection of their bonds will de- posit the same with the North American Trust Company, 195 Broad- way, New York City, and receive receipts therefor and a contract agreement under which the undersigned committee will undertake to collect the same.
W. N. COLER & Co., R. F. PETTIGREW, D. L. RUSSELL, MARION BUTLER.
Depositary,
North American Trust Co.,
195 Broadway, New York City.
Wheeler H. Peckham, Counsel.
Senator Butler in a speech made in Raleigh in 1910 stated that when he found that carpet-bag bonds were being accepted by the committee he had the advertisement stopped and de- clined to have anything further to do with the matter. In 1906 he was approached by a representative of the Carlisle syndicate which wished to employ him. The following are extracts from his reply :
These bonds were issued by a Legislature largely controlled by aliens and irresponsible native associates, mostly blacks. These bonds
328
HISTORY OF NORTH CAROLINA
sold for little on the market, and that little was largely, if not wholly, stolen by the carpet-baggers and their associates.
* * So my advice is to have nothing to do with the Carlisle Committee. At any rate, I will have nothing to do with their efforts to collect these bonds or any other fraudulent bonds issued by a carpet- bag Legislature. My position is that I will not act as counsel, or directly or indirectly have anything to do with 'any effort to collect any bonds that are not honest, and for which the state did not get a valuable consideration. * If an attempt is made to collect these bonds, I not only will not be employed, but I will oppose such an effort.
1
In. 1905 the bondholders planned to induce Venezuela to accept some of the bonds for suit but the plan for some rea- son fell through. The following year the committee offered a large number to Colombia with an expression of regret at the treatment of that country by the United States. Hayne Davis, a native North Carolinian, who was at the time coun- sel in the Colombia legation, advised against acceptance and the offer was refused.
In 1905 the legislature of New York, presumably at the re- quest of the committee, passed a law providing for the ac- ceptance of gifts of bonds, and directed the attorney-general to bring suit on them when necessary to secure payment. Bonds were then offered the state, but Governor Glenn wrote Governor Higgins such a statement of the character of the bonds that the offer was promptly refused. In the same year a similar offer was made to Michigan which in 1901 had passed a law providing for acceptance. Governor Warner laid the matter before Governor Glenn whose letter of reply and explanation made acceptance impossible.
By this time South Dakota had attained a rather unpleas- ant notoriety and the governor, in his message of 1907, urged that the proceeds of the suit be returned to North Carolina.
In 1910 the State of Rhode Island demanded the payment of bonds which had been given by the Carlisle syndicate the year before. These were fifty-three bonds issued for the Wilmington, Charlotte, and Rutherford Railroad, thirty bonds issued for the Western, twenty bonds issued for the Atlantic, Tennessee, and Ohio, fifty issued for the Western North Caro- lina, and thirty-two issued for the Williamston and Tarboro, with a total of 11,367 coupons attached, the total face value
.
HISTORY OF NORTH CAROLINA 329
being $511,010. It then developed that in May, 1909, a law had been quietly put through the legislature, making the ac- ceptance of such gifts mandatory. When Governor Kitchin stated the nature of the bonds to Governor Pothier, the lat- ter gave the matter very careful consideration and finally decided that it would be a blot upon the state to accept such a gift. Public sentiment in the state endorsed this view and the legislature, which was in session at the time, repealed the act over the protest of the bondholders, represented by E. L. Andrews who stated that an effort would be made to in- duce other states and some of the South American republics to accept them. The Providence Bulletin and the Providence Journal both opposed acceptance, the former saying:
When a state receives as a gift from men who are actuated by ulterior motives a claim against another state, there seems to be some- thing peculiarly dishonorable about attempting to collect it by recourse to the courts. Rhode Islanders of sensitive feelings will not thank the committee which gave the state repudiated bonds and coupons of the State of North Carolina to the full value of over half a million dollars and they will find fault with the Legislature that passed a law compelling the general treasurer to bring suit to collect such a "debt."
In 1910 Nevada was offered certain of the bonds and Governor Dickerson refused to accept them. An application for a mandamus to compel acceptance was made and went on appeal to the Supreme Court of the state which upheld the application, whereupon the legislature repealed the law providing for acceptance.
In 1916 the syndicate offered the State of Missouri a large number of the bonds. Governor Major, who was opposed to acceptance, consulted Senator Simmons and upon receiving information as to the bonds was able to persuade the other members of the board, charged with the decision of such questions, to refuse the offer.
Doubtless other states have been offered bonds, but if so, the facts were not made public, and with the failures in Nevada and Missouri the bondholders apparently lost hope of inducing any state of the Union to share in the disgraceful business. From time to time they have made demands upon the governor to bring the matter to the legislature but of course have gained nothing thereby.
.
330
HISTORY OF NORTH CAROLINA
Although there was nothing to be gained in this country, there was still hope in a foreign country and in 1916 Cuba filed a petition in the Supreme Court of the United States for leave to sue the state for the payment of certain of the bonds held by that country. The state at once employed counsel and preparations had been made for contesting the petition when Senator Overman, who had introduced in the Senate a resolu- tion of inquiry into the matter, was notified by the Cuban min- ister that President Menocal had revoked the decree giving authority for the suit, and thus ended the matter.
The campaign of 1902 was in many ways the most inter- esting conducted in the state since 1900. It preceded the first election to be held under the provisions of the new amendment and both parties exerted every effort to carry the state. For victory the republicans relied on the natural re- action, and upon the discontented democrats, whom they now declared to be emancipated from the the negro question. By 1902 every negro postmaster in the state but one had been re- moved and the soft pedal was put on hostile discussion of the amendment. But the amendment was not accepted as a finality and at intervals it was bitterly attacked as unconsti- tutional and politically immoral. Talk of the setting aside of the amendment by the Federal courts was frequent and there were constant threats of the indictment of all registrars or election officials who denied to any negro the right to vote. Consequently the "Lily White" movement which began in North Carolina in this campaign, although it seriously alarmed the democrats, was really of comparatively little importance, particularly after President Roosevelt made it known that, contrary to the general belief, he opposed it.
That there was a considerable body of discontented demo- crats was well known. A large element in the party was op- posed to Bryan and all his works. A growing number, chiefly manufacturers and other business men, were friendly to pro- tection and the new imperialistic tendency of the republican party. Others were unfriendly to those in control of the demo- cratic party. They had all been kept in line by the presence of the negro in politics and the misgovernment which had always attended the dominance of the race in the republican party.
331
HISTORY OF NORTH CAROLINA
With the negro finally removed they thought they saw an op- portunity to re-shape, even to re-create, the party, although the majority were not quite ready to take the final plunge which was involved in a change of name. In other words, tra- ditional dislike of the republican party was still a powerful factor in politics in the state. The republicans of course wel- comed the possibility of an alliance which would restore them to power.
The only state officers to be chosen were the chief justice, two associate justices and the superintendent of public in- struction. Judge Clark was a candidate for chief justice and considerable scattered opposition to him developed in the party, although it was soon apparent that his nomination was certain. Henry A. Page delivered the first democratic attack upon him without much apparent effect. In April, Maj. James W. Wilson, the former railroad commissioner, published a bitter attack, charging that he had been hand and glove with the fusionists, that he had tried to persuade them to elect him to the Senate in 1895, that he had been the confidential politi- cal adviser of Butler and Russell, even seeking to secure from the latter the appointment as chief justice to succeed Fair- cloth, and that he had only come back into the democratic camp when he saw that fusion faced certain defeat. He also declared him unfit for the office because he had interfered in the preliminaries of cases upon which he would later sit. He declared that letters proving his contention were still in ex- istence. The Charlotte Observer and the Raleigh Morning Post aired the matter fully and much attention was aroused. Demands for the letters grew loud and the immediate defence offered by the friends of the judge was seen to be hopelessly weak without them. Finally in May Judge Clark published a reply which included certain letters to Russell which he de- fended. They showed that he had advised Russell legally but they did not bear upon the political charges at all.
When the democratic convention met, Judge Clark was nominated for chief justice and Platt D. Walker and H. G. Connor for associate justices, the latter winning the nomi- nation after a close race with Judge George Brown. Soon afterwards Thomas N. Hill, of Halifax, a democratic lawyer
332
HISTORY OF NORTH CAROLINA
of some reputation, announced his willingness to accept the nomination for chief justice as an independent democrat, if it was tendered by an assembly of democrats. A meeting of independents was held in Greensboro at which he was nomi- nated and local meetings in a number of cases endorsed the nomination. The republican convention also endorsed him making no nominations for associate justices. But when the election came the names of Connor and Walker were placed upon the ticket.
The republican convention for the first time in the history of the party in North Carolina contained not a single negro delegate. A number appeared but were in all cases replaced by contesting white men. A resolution declaring the accept- ance in good faith of the amendment was offered and defeated, and the following rather ambiguous plank inserted in the plat- form: "We declare that when the constitutional amendment was adopted by the people of North Carolina two years ago, it passed out of the realm of politics, and that if Governor Aycock, Senator Simmons, and others keep faith with the people in the pledges then made, there can be no such thing as a race issue in the present campaign."
In the campaign, however, the democrats declined to omit the race issue, declaring that until the republicans accepted the amendment unreservedly, the negro could not cease to be a political question. There was, of course, some justification for this position. In addition, the effectiveness of the issue had been proved in 1898 and 1900 and there were many in the party, fortunately only a minority, who did not want to see it disappear. Consequently, it was discussed considerably throughout the campaign and with considerable effect, since most people believed that if the republicans should win, the amendment in some way would be overthrown and the right of suffrage restored to the negro. And there is but little reason to doubt that such would have been the case. For the rest, the democrats drew comparisons between republicans and demo- cratic rule and asked the people if they were willing to restore the former. The "clean" administration to which the repub- licans invited the attention of the people was declared to be typified in the various scandals already described and in the
333
HISTORY OF NORTH CAROLINA
defalcation from the state treasury of more than $16,000 by Major Martin, a republican politician, who was a clerk in the office. This had only been discovered after the democratic ad- ministration had come in.
The republicans sought chiefly to secure the support of the business classes and to carry the legislature which would secure the re-election of Senator Pritchard. Senator Pritch- ard was active in the campaign and conducted a joint can- vass with Locke Craig which excited much interest. On the whole, the contest was spirited but lacked entirely the intensity whichi had characterized the campaign of 1900. The Red Shirts did not reappear.
The election showed a decrease in the vote of approxi- mately one-third. The republican vote was about 70,000. The democrats were victorious at all points. Judge Clark received more than 60,000 majority, there was easy control of both houses of the legislature, and every congressional candidate was elected.
By 1902 Aycock's educational policy had aroused much mild opposition and some bitter antagonism in the state. His utter sincerity in continuing to press it caused considerable surprise as well, for there was a large element who had used education merely as a political catch-word designed to at- tract votes, and when they saw the party safely back in power, they were content to forget its pledges. Particularly was this the case as concerned the education of the negro. Feeling on this point was very. strong in the East and very general. In the legislature of 1901, bills were introduced providing for the submission to the people of a constitutional amendment dividing the school taxes between the races on the basis of what each paid. These were strongly opposed by Judge Connor, who was chairman of the committee on edu- cation in the House. Governor Aycock finally made it clear that he would regard the passage of any such bill as so clearly a violation of the party pledge given through him to the people that he would resign. The bills never came to a vote, but in 1902 a number of democratic county conventions declared for division and the question was thus again brought up. In his message of 1903, Aycock attacked the proposition and by his
1
334
HISTORY OF NORTH CAROLINA
opposition secured its defeat as he did again in 1905 when the discussion was finally ended.
Governor Aycock lost some friends by his course and was the object of bitter criticism, but he never faltered and the fight he made was one of the bravest acts of his career and also one of his chief titles to fame. In the end he won the respect and support of all. Not that he did not go out of office with a diminished reputation; almost every governor of North Carolina does that, probably because the lack of power in the office prevents any man from living up to the hopes entertained of him. But he steadily regained power with every class and was the most beloved and trusted man in the state when death found him preaching the gospel of universal education. Aycock never had just the same sort of hold upon the people that Vance had. Vance was beloved for what he had done in behalf of the people as war-governor, and his magnetic power and contagious broad humor. Aycock was also magnetic, not lacking in humor, it is true, but he was of a far more serious type than Vance and he was far more un- selfish. He was a born politician in the sense that he in- stinctively knew the people and could arouse their sympathies and touch their hearts. In his dealings with them he was always utterly sincere, always preferring the open, despite the fact that he was never cautious in his convictions. His is the outstanding figure of his generation.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.