The Bismarck Tribune Newspaper, June 4, 1919, Page 3

~ Does North Rat fs . \ & The famous bond-default case of St. Clair County, Mis- souri, ‘has just been brought to a closé, forty-nine years ‘after one: Péter La Due made: his:record-breaking ‘and successful “get-away” with nearly a:quarter of a million dollais of the money. of innocent investors. The effect of La Due’s coup and the following ‘default. cast a cloud over St. Clair.County from which it is expected it will new emerge, after nearly half a scéhtury, for the rights ofthe investors of 1870 have at last been acknowledged and the claims settled. = ‘ “During the years since the $250,000 in bonds were issued ‘all progress in the ¢outity was halted,” says Straus Investors’ Magazine. “Title to every acre of land was clouded, school- houses have gone to rack apd ruin, the courthouse is falling into decay, and not a dollar Was spent in public improvements.” The story of how’La Due got away with the county’s $250,000 worth of bonds, delivered to him in a bushel-basket, is interestingly told by this magazine, which says: The year following the Civil War was a period of great railroad development for the United States. pletion of~the Unio Pacific, the first rail ‘line linking-the Atlantic and: Pacifi¢ oceans, communities. everywhere set. to work to:-aid Yailroad-devélopment in order to further: thejr own prosperity. Subsidies were voted by states, counties, and muncipalities, aid so loose was the practise in many communi- ties that dedigning men promptly took advantage of the oppor- tunity offered. j 2 > _ A man named‘Peter La-Due came to"Missouri claiming to represent a largé amount of New York capital. He organized “a.line and called it by-the picturesque name of the. Tebo, and Neosho Railroad,.to,run from: Kansas City.to Heleria, Arkansas. Bach of the counties zine the line voted:a:subsidy of $250,000, tobe raised by je isstiince of twelve-year bonds, bearing. ten | ‘pet-cent intéfest.. A ‘properly drawa 'bond,, of: coursej-avould “ contain a clatisd protecting the county against failure tb build. ‘This, however, was waived by St,, Clair County, ahd it-was freely charged that money and liquor delivered’ to:certain county. judges ware the inducements. f The 250 bonds, each of $1,000 denomination, were deliv- -ered in a bushel-basket to La Due, Work began on the railroad, eight miles were graded, and about $20,000, was Spent in the county, before the promoters decided that .the pretense had gone far endugh,~ The work stopped and St. Clair County began to realize that it had been swindled. In the ineantine, how- ever, La Due had sold the bonds ‘at 82.5 aid interest.to innocent purchasers. .There.are. no. bond-interest tables. in existence showing the net yield of a ten per cent bond running twelve years, sold at 82.5 and interest, but the net to the purchaser was not far from twelve per cent. The coupons came.due and were' met by a tax levy of one And one-fifth per cent. * By 1872 the patience of the citizens of St. Clair Coutity had been sttained to the limit,-and they indignantly refused to * pay further taxes to settle the county’s debt for a railroad that did not éxist. The. cotirts came to thei? assistaice, refused to levy, and the bonds‘went by defaulf.’ Then lawyers were: en- gade by the bond-holders. They sued and got judgments, but it,did them no good, for, says the writer in the magazine: A mandate was issued ordering-the county court to levy taxes and a deputy sheriff was sent to Osceola to serve the papers. The judges of the county took to the woods and hid in the scrub-oaks. and rocks until the marshal got tired. and went back to Kansas City. The bonds stayed in default, In 1877 one court levied the railroad tax, but the citizens refused to pay it;‘a mob, went to the court-house, carried away the tax-collector’s books, and cut out all the railroad entries. The Federal court at Kansas City held that the judges of St. Clair County were:in contempt. From that time on, sessions ~ ' ~ ~ \ ee j The Nonpartisan League Program contemplates an initial bond is- sue of $17,000,000, | Interest and-principle must be secured by general tax- ation-and met out of.the public purse. if. the banking; business, the. flour ONE REASON WAY THE M With |the coin-. . BISMARCK DAILY: TRIBUNE “ty ‘mia, Fee Lev earap Bef « ; 13 of the county court were held regularly in the woods or in caves in the mountains, Dating fromthat time, ‘the county judges of. St. Clair spent most of théir titne in jail; in fact, it is declared by those who have been interested in the romantic history of the coup of Peter La Due that the judges of the coufity, at one time or another, were confined in every jail in Missouri. Men con- sidered it a: patriotic duty to be elected county judges solely to £0 to jail for the cause, while others regarded it as a soft berth at $2 a day. But the matter did not rest because.o . the attitude of the judges. -Says the magazine: 3 Jn 1885 the Federal court ruled that the meré leaving of the. writ\at the office of the county court was valid service. This being sufficient, the chief county judge was atrested and sent to jail. am ye \ T Various attempts were made to settle-the bondholdet's’ claims. Thé county had an opportunity in 1875 to cancel the debt for $175,000. This was treated with scorn.. In 1898 a proposal was made to settle for $400,000. The debt by this time, with accrted iriterést,and costs of unending litigation, had mounted into the millions of dollars, so this offer répre- sented a considerable_sacrifice on the part of the bondholders. The couhty court, however, refused fo ‘call the election, and weit to jail, as usual. 4 j Some Years ‘ago ‘a patriotic resident of S. Clair County, visiting in New York, purchased nineteen bonds at a price said to be-less than one-twentiethi of theit par value, presented them to: the county, and: had them canceled. -With-this exception, all of the $250,000 in bonds remained outstanding. Ohe of - ~ ¢ _\ 4 Hes | ota Want to Embark Into Unlimited Debt? ISSOURIAN HAS TO BE “SHOWN” the bofidholdérs, who was as obstinate on his side as the St. Clair County residents were on theits, clipped hig couporis regularly, deposited-them in bank-for collettion, aid added a new chapter to the litigation, and every time. they came -back unpaid, f f , 4 Thé late Senator Stone, of Missouri, interested himself in the case. He won his first race for Congress with the solid vote of St. Clair County, declaring that, once in Washington, he would “clip the wings of jthe.Federal courts, and Stop this litigation by an act of Congtess.” .Nothing came of it, how- ever. On the side of the bondholdérs;-attempts were made to pass laws through the State legislature authorizing the Federal coats fe take charge of the county and.collect the money. All failed. ~ 7 €ass,'Henry, Knox; and Dallas counties had also fallen for the ‘scheme of the persuasive Mr. La Due, and had given the fraudulent railroad a bounty. As a matter of fact, nearly ) every county in the State had been swindled in some way by a railroad promoter at ofie timg or another. Missouri appéats to have been an “easy mark’’in those days, and perhaps it is because of these unfortunate -“investments” that you now have “to show” the average native of the State. Henry County surrendered in 1882, and settled for $525,- 000. The last payment of this sum was made in 1915, and the county held a big celebration. Unlike St. Claix County, Henry paid, and prospered, and now, says the magazine: It is a wealthy and happy community with: broad-aeres; smiling farms, good roads, well-constructed villages, and con- tented people... St. Clair County remained “sot,” as the farmers said.. No money could be, borrowed on mortgage-for thé same « reason ; no riéW. roads Were built} the old onesfell into utter disrepair. Its inhabitants. lived. a liféof poverty that was equaled only by their determination never to pay. At length, however; as ‘the older generation died off, the younger. mem- bers gained power and action:,was started a short time ago * fora compromise. The amount of the/debt is a vivid and striking illustration of how money grows at compound interest. At six per cent / motiey will double itself in eleven-years and ten months, atid at teri. per. cent. in. approximately seven years. The original $250,000 indebtedness had growin te nearly twenty times the original amount, through the action of compound’ interest and through legal experiditures reaching the amazingly large sum of $4,695,419,53 on December 1, 1918, It was proposed to settle this debt for a paymeit, of $585,000,.which represented about twelve and ond-half per cent of the amouiit due. The bondholders, after. many coiiferéfites, agreed to abdndon their claim on this basis and the matter was then put up to the voters. It took three elections to cary thé compfoniise. The first Vote showed in a striking way how popular sentiment in the county then stéod agajnst-making any payment. Only:.91 voted in-favor of the settlement aoe against it., There were renewed agitation ahd distussion, The sééoid vote showed 800 in favor of the settlement arid 1,300 against \ it. Once'moré the issue was debated. . Little by little the oppo- nénts of payment camé to see that the only salvation for the courity lay in paying the bondholders, At the third election the - vote stood. 1,900 in favor of the compromise to'350 against it. - The county, accordingly put out a new loan, making a tax levy to pay the interest and a sinking fund.to pay the debt itself. Retribution justice dverlook the St. Clair County judges, who Were eventually driven from the comihunity. Two or more of the judges of the Cass County court were lynched by a mob, but what became of Ia Due and his ill-gotten gaits never has been discovered.—(From Literary Digest). Are you ready to hand your bank roll over to Townleyized indus- tries? Do you trust the League Managemetit’s business skill to the extent that you will give its henchmen power of attorney-to mortgage your prop- mill andthe elevators, fail to pay dividend.) 5 -jq4 bys eas je: ‘erty. for generations to come. Wipien © SoOBUT THIS: IS: NOT ALL: ‘ ie ue ae If the meit selected to run these enterprises conduct them at a loss, ' you, Mr. Farmer, you, Mr. City. Man, will pay the deficit-out.of your own - pocket,-It willbe added to yourtax bill. . =. ssi, wot Dee utes Remember what happened to St. Clair.County and other Missouri communities. aust i‘ bs ' Then ‘vote NO on all the seven propositions at the réferendiim elec- tion June 26.) jo a MM a a ¢ . = ate 74% Ps (POLITICAL ADVERTISEMENT),