ONE MILLION DOLLARS SQUANDERED
$400,000 OF STOCK SOLD FOR $86,585.71
Railroad Bull and County Ox
In regard to the remark above of a willingness on the part of the Missouri, Kansas & Texas to receive interest and avoid taxation, the following order of the court seems to bear out such a construction, outside of the notorious fact of a desire for under valuation when it came to the assessment. This order, dated October 22, 1875, reads:
"It is ordered by the court that if William Bond, receiver of the Missouri, Kansas & Texas Railway Company, shall pay into the county treasury on or before the first day of November, 1875, the state interest tax amounting to $1,285.60, and school tax of the sum of $2,422.45, which is now due from said company, the balance of the tax due for the year 1874 will be made in two equal sums of $396.61, payable respectively on the 1st day of April and July, 1876, without interest until after maturity, which, if not then paid, shall draw ten percent."
There was a disposition on the part of persons holding Henry County bonds which would come due the following January, 1877, to find out what could be done to secure their pay, and they suggested to the county court a conference. Judges M. Wood and M. A. Stewart were authorized to see what the bondholders proposed. They went to St. Louis in April, 1876, and just what they reported on their return is not of record, but this little order can be found on page 225 of record book H, which reads to the point:
"It is ordered by the court that E. Allison, county treasurer, be and he is hereby directed not to pay any money after this date on any railroad coupon of Henry County until the further order of this court. - May 20, 1876."
There was considerable lawing done in regard to these bonds, and quite a number of lawyers, both inside and outside of the county, had received liberal fees for making defense of the county's interest, but the first practical result of the above order seemed to be in the purchase of forty-five one thousand dollar bonds for the sum of $18,058.10, a trifle over forty cents on the dollar.
In the meantime, a Mr. A. H. Nicholay got judgment in the United States Circuit Court against the county for $25,000, and a mandamus was issued, compelling the county to pay, and accordingly a levy was made of 15 cents on the $100 valuation, to pay this judgment. This levy was made in May, 1878, at the time of the levy for general taxation. Judgments began to fall fast upon Henry County, nearly all the suits going against her. A tax became necessary, for it had been determined to use the sinking fund and all other funds that could be spared to purchase bonds and coupons at 40 cents on the dollar, or thereabouts, judgments or no judgment. The creditors in fact knew nothing of funds on hand, and would agree to wait for a new tax levy. Therefore, the court asked for a five mill tax to raise money to pay these judgments and got it, and it was enough to add to the purchasing fund a little to discount bonds on. Judge Wright had granted the order, and then when a new batch of judgments were rendered later, Judge Gantt granted another. However, something had to be done, and the court made a bold strike to get rid of the stock held in the Missouri, Kansas & Texas Road, and secure the best price possible, and invest the proceeds in the County's indebtedness. There did not seem to be much outside talk about this move. Something near $100,000 in judgments and bonds held by those who had secured them, caused a desire, if possible, to tide over and save the county. It had defaulted on principal and interest from 1875, but the mandamus knew "no such word as fail."
Judge Gantt's Appointment
August 11th, 1879, the following appointment is made of record:
"It is ordered by the court that James B. Gantt be, and he is hereby appointed agent of Henry County, in the State of Missouri, to exchange the stock which Henry County holds, to wit: Four thousand shares in the Tebo & Neosho Railroad Company, for the same amount of stock in the Missouri, Kansas & Texas Railway Company, and also that he be authorized and empowered to sell said stock in the Missouri, Kansas & Texas Railway Company, and to assign, set over and transfer said Missouri, Kansas & Texas Railway Company stock to the purchaser or purchasers thereof, and said James B. Gantt is authorized to endorse said Tebo & Neosho Railroad Company stock in the name of said county."
This wasn't a very strange order, and as the stock of the aforesaid road was of but little quotable value, it was not thought or expected much could be done with it.
Judge Gantt made his preparations to carry out this order as rapidly as possible, and the county court gave him a verbal order to secure as his assistant Major H. W. Salmon. The report of their doing is so important to the people that it is given here in full.
The Closing Out
The final closing out of the M. K. & T. stock reduced the outstanding indebtedness of the county $183,301.77. The sale was supposed to have been made too soon, as the stock went higher the next spring but judgments wouldn't wait, and as the stock went up so did Henry County bonds, so if loss was made on one side it gained on the other. It looks rather hard to see what has been paid, what is yet to be canceled, and then look at its results. Still, at this time the die was cast, the matter has been compromised, and while it may be considered something of a burden, the people today can far easier redeem the debt than one-half of it could have been done six or seven years ago. Here is the report:
Judge Gantt's Report
To the County Court of Henry County, Missouri:
I have the honor to report that in compliance with the order of this court, made and entered of record at the August term, 1879, and on the 12th day of August, 1879, appointing me the agent of Henry County to exchange the four thousand shares of stock held by Henry County in the Tebo& Neosho Railway Company, for a like number of shares of the stock of the Missouri, Kansas & Texas Railway Company, and to sell the same for the use of said county, and in pursuance of the verbal instructions of the court, that I should associate with myself Major H. W. Salmon, to assist and cooperate with me in effecting the exchange and sale of the Missouri, Kansas & Texas Railway stock. We proceeded to New York City, reaching there on Saturday, the 4th day of October, 1879. We succeeded in effecting the exchange of the old stock, and the issuance of the new stock in the name of H. W. Salmon, on the 8th day of October, 1879, and sold said new stock on that day, and the day following, through the firm of S. F. Johnson & Co., No. 2 Nassau Street, New York City, whose statement of the sale and accounting for the proceeds thereof, are herewith filed and made a part of this report, and is marked "Exhibit A."
From these statements, it will be observed, they account to Major H. W. Salmon for the proceeds of seven thousand shares, instead of four thousand shares, the amount of Henry County's stock. This excess of three thousand shares is the stock of Vernon County, Missouri, whose agent, Judge Paul F. Thornton, accompanied us, and transferred the stock of Vernon County to Major H. W. Salmon, also, in order to accomplish for Vernon County the same purpose we had in view, and in accounting Vernon County had three-sevenths and Henry County four-sevenths of the net proceeds.
That is to say, the whole amount received by Major H. W. Salmon, of S. F. Johnson & Co. was $151,525, of which amount I received of Major Salmon four-sevenths, or $86,585 71, and Judge Paul F. Thornton for Vernon County three-sevenths, or $64,939.29; so that I have had in my hands the said sum of $86,585.71, which sum, after deducting the amount of our expenses incurred in this behalf - that is, for traveling expenses, hotel bills and other expenditures on this account, which were both for Major Salmon and myself, $600 - left in my hands for investment $85,985.71. You will further notice that the stock was sold at from $21 per share to $22 1/8 per share, thus averaging the highest price that Missouri, Kansas & Texas stock had ever commanded in the stock market, as can readily be seen by the "Stock Report" compiled from the record of the New York Stock Exchange, covering a period of twenty years from 1860 to 1880, which shows in tabulated form the highest and lowest prices this stock brought during each month since it was placed on the stock board of the New York Stock Exchange, which said report I also file herewith as a part of this report of mine, making it exhibit "B."
It may be proper for me to state in this connection that this Missouri, Kansas & Texas stock declined and advanced for several weeks after this sale, going as low as $20 per share in November following our sale in October, and afterward advancing in the late winter and spring, until some of the counties, viz, Pettis County, sold for $30 per share. While on the one hand it may be a subject of regret that we did not hold this stock and obtain the highest price therefore, yet it will and must be remembered that the order of the Court was made under peculiar circumstances. For years the stock had been considered utterly valueless, and even in January, 1879, was quoted at $5 3/8 per share. So great was the mortgage debt of the railroad and the continued default of the company to pay interest on its first mortgage bonds. When your Honors determined to sell the stock you had a two-fold object in view, namely; to prevent a levy and sale of this stock in favor of some of the numerous judgments, creditors of Henry County, who had obtained their judgments in the United States courts prior to your order, as had been done in a number of cases against other Counties, notably Schuyler and Callaway Counties, and they entirely sacrificed the stock and at the same time paying out its proceeds at dollar for dollar on these judgments. Your order prevented this sacrifice and saved thousands of dollars to the county. Your other object was to obtain from this stock a fund with which you could purchase in the outstanding railroad indebtedness of the county while they were at a large discount. This you have accomplished in a large measure and whatever the result has been, no one can question the motives of the court, and considering the advance in securities of all kinds the past year, there is still no doubt you sold at the proper time. In carrying out the verbal instructions of the court and furthering its purpose to invest the money received from the sale of this stock in buying in the outstanding indebtedness of the county consisting of its railroad bonds together with the interest thereon and the judgments obtained on the same against the County, I have with the aid and assistance of Maj. H. W. Salmon, whom I called to my assistance as desired by the court, bought Henry County bonds, judgments against the county, interest coupons and interest thereon amounting in the aggregate to $183,301.77 buying the same as rapidly as I could under the circumstances, avoiding at the same time making any purchase that was in our opinion calculated to advance the price of the bonds of the County and thus increasing our indebtedness, and, as your Honors are aware, consulting in almost every instance with the court prior to making an investment.
By reference to a detailed statement herewith filed, marked Exhibit "C," you will find that I have purchased with the funds aforesaid, fifty one bonds of $1,000 each, of tens of 1870; fifty-four bonds of $1,000 each, of tens of the C. & M. Branch of Tebo & Neosho Railroad, of 1871, and twelve bonds, tens of 1871, of $1,000 each, of the Clinton and Kansas City Branch of the Tebo & Neosho Railroad, with interest coupons thereto attached as per statement; also judgments against the county on railroad bonds and coupons, and a small amount of extra detached coupons from bonds. The total expenditures on account of the purchases made as stated above together with the expenses of H. W. Salmon, myself and W. D. Tyler, incurred in traveling expenses, telegrams and express charges, etc., amounts to $84,666.57, leaving in my hands $1,319.14, which sum I now here hand to the court.
Concerning the prices paid for these bonds, I will say that the bonds of Henry County, as well as the bonds of other counties, and all other securities have advanced since this business was undertaken; caused, as all are aware, in a large measure by the easy money market, and the general prosperity of the country.
He Bears Testimony
Before closing this report I desire now and here to bear testimony to the skill and fidelity to Henry County, shown by Maj. H. W. Salmon throughout this whole business. I do not desire to arrogate to myself the credit of having made the purchase of these bonds, and managing the negotiations with the various persons with whom we had to deal, as I have relied in a great measure on his large experience and extensive acquaintance with such matters.
At one time we thought it best to send some discreet person to Kentucky, where a large number of our bonds are held, and we selected for this purpose Mr. W. D. Tyler, cashier of the First National Bank, of Clinton, and while he did not succeed in making the purchase, he obtained much valuable information, and his expenses, $125, I have paid as was agreed before hand. In conclusion, I desire, both in behalf of Major Salmon and myself to thank this court and its individual members for the uniform courtesy and confidence reposed in us in the management of this matter, coming as it did unsought by us. And I will only add, in my own behalf that every act and move I have made in the premises has been to subserve the best interests of Henry County. All of which is respectfully submitted for your approval. - JAMES B. GANTT
The following are the papers referred to:
Statement of bonds, interest coupons, and judgments purchased for Henry County, with funds arising from sale of Tebo & Neosho stock, showing the date of each purchase, from whom purchased and the amount paid therefore.
NOVEMBER 1, 1879 - LOT NO. 1
Bought of Donaldson & Fraley 22 bonds, Clinton & Memphis branch Tebo & Neosho Railroad, Nos. 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89,90, 91, 92, 93, 94, 95, 96 and 97, with coupons of 1872 and subsequent, paid $11,000.
JANUARY 28, 1880 - LOT NO. 2
Bought of Alfred Ennis, attorney for Portsmouth Savings Bank, 40 bonds, 10s of 1870 issue, Nos. 113, 114, 115, 116, 117, 119, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 148, 149, 150, 151, 152, 156, 157, 158, 166, 167, 168, 169, 182, 184, 214, 215, 216, 217, 218, 219 and 220, with July, 1879, coupons and those subsequent. Also three coupons of July, 1878, from bonds 142, 143 and 144. Also two judgments in favor of the Portsmouth Savings Bank vs. Henry County, in the United States Circuit, Western District of Missouri, Nos. 1035 and 1300, as per statement accompanying said bonds. Paid $28,368.90.
MARCH 20, 1880 - LOT NO. 3
Bought of the Farmers and Merchants, Hannibal, Missouri, one bond, No. 24, Clinton & Kansas City Branch of Tebo & Neosho Railroad, with July, 1878, and subsequent coupons attached. Paid $410.
MARCH 20, 1880 - LOT NO. 4
Bought of W. J. McNight, four January, 1876, Coupons, from bonds
Nos. 139, 145, 149 and 150, of issue of 1867. Paid $52.
MAY 5, 1880 - LOT NO. 5
Bought of Donnell, Lawson & Simpson, 21 bonds, Nos. 11, 12, 13, 14, 15, 18, 49,50,56 and 57 of Clinton & Memphis Branch, and Nos. 12, 13, 14, 17, 19, 20, 27, 28, 29, 30 and 49 of Clinton & Kansas City Branch of Tebo & Neosho Railroad, with coupons of 1879 and subsequent attached, also judgment No. 1297 of E. C. Lewis vs. County, June 30, 1879, for $8,852, in United States Court. Paid $16,832.67.
AUGUST 29, 1880 - LOT NO. 6
Bought of Donalson & Fraley ten bonds, Nos. 19, 20, 21, 22, 23, 24, 44, 45, 46 and 47 Clinton & Memphis Branch, Tebo & Neosho Railroad, with coupons of July, 1876, and subsequent. Paid $7,775.
SEPTEMBER 1, 1880 - LOT NO. 7
Bought of Donnell, Lawson & Simpson ten bonds, Nos. 101, 102, 103, 104, 105, 106, 107, 108, 109 and 110 Clinton & Memphis Branch, Tebo & Neosho Railroad, with coupons of July 1875, and subsequent. Paid $7,850.
NOVEMBER 10, 1880 - LOT NO. 8
Bought of Donalson & Fraley one bond, No.64, Chicago & Memphis Branch of the Tebo & Neosho Railroad with coupons of 1875 and subsequent. Paid $860.
DECEMBER 1, 1880 - LOT NO. 9
Bought of Donnell, Lawson & Simpson "Patty B. Lex bonds," nine bonds, 10s of 1870, Nos. 226, 227, 228, 229, 230, 231, 232, 233 and 234, with coupons January, 1879, and subsequent, together with judgment of W. R. and Patty B. Lex vs. Henry County in the United States Circuit Court, Western District of Missouri, No. 1,274, November 21, 1879, for $2,570.50. Paid, $8,542.50.
DECEMBER 1, 1880 - LOT NO. 10
Bought of Donnell, Lawson & Simpson one bond, No. 4, 10s of 1870, with coupons of July 1876 and subsequent. This bond is now held by Donnell, Lawson & Simpson, of New York, for H. W. Salmon. Paid, $885.
DECEMBER 6, 1880 - LOT NO. 11
Bought of Donnell, Lawson & Simpson, one bond, No, 109, 10s of 1870, with coupons of July, 1876, and subsequent. This bond is also in the hands of Donnell, Lawson & Simpson, Of New York, held for H. W. Salmon. Paid, $915.
DECEMBER 6, 1880 - LOT NO. 12
Bought of James M. Avery, one bond, No. 120, Clinton & Memphis Branch of the Tebo & Neosho Railroad, 10s of 1871, with coupons of January, 1875, attached, and subsequent, and six extra coupons, Nos. 153 and 154, July, 1874, 10s, 1871, and July, 1876, January, 1877, July, 1877, and January, 1878; coupons from bond 24, Clinton & Memphis Branch of the Tebo & Neosho Railroad. Paid, $1,050.
Lot No. 13, W. D. Tyler's expenses to Kentucky, $125.
Total amount expended, $84.666. 57.
"Which said report, being seen and duly considered by the court, is ordered filed. And now comes James B. Gantt and turns over to the court all the bonds, coupons and judgments as per statement in his report, including bonds Nos. 4 and 109, mentioned in lots 10 and 11, also the treasurers receipt for balance not expended of $1,319.14. It is thereupon ordered by the court that James B. Gantt be fully released from further responsibility as agent of Henry County in the matter aforesaid. It is further ordered by the court that the bonds, Coupons, and judgments, aforesaid, and all other papers in the matter, be filed in the office of the clerk of this court, and that said bonds and coupons be and are hereby canceled in the presence of the court, by writing the word "canceled," date, etc., across the face or the signatures on the bonds with red ink.
"It is ordered by the court that a warrant be drawn on the sinking fund for the sum of $400, payable to James B. Gantt for legal services on behalf of county per account, this day allowed and filed."
This report was made to the county court and entered of record December 8, 1880.
A Tax Levy
The petition for an assessment made before Judge Gantt and before referred to was made May 16, 1881. There was no particular amount of levy mentioned, but enough to cover the amount of the judgments and costs of the suits. The order was granted May 17, 1881, and the levy was made and $1,087.68 of the amount paid February 10, 1882. There were seven of these judgments, for which the order granting the levy referred.
As it was found next to impossible to secure many more of the bonds at a heavy discount and the costs of a suit were expensive, one more effort was made to compromise the debts. The people at last began to realize that it was but to settle the debt and take a breathing spell. The strain had been going on for three or four years. A proposition to fund the debt at seventy-five cents on the dollar was offered to vote upon, and the county court called a special election June 26, 1882, to test the feelings of the people. The vote was taken and there was a majority of 880 votes in favor of the proposition. In making the order to carry out this affirmative vote the court stated that there was a debt of nearly $700,000 yet to be looked after.
The debt was to be paid at seventy-five cents on the dollar, the bonds, coupons and interest to be added together The new bonds to be 5-20s, that is, to run twenty years and be redeemable after five years at the option of the county, and to pay interest at six percent per annum, payable annually instead of semi-annually. As the original debt was $600,000 and it has been running nearly thirteen years on an average, and $450,000 drawing ten percent, the sum, if none had been paid, would have amounted at this time to over $1,400,000, including the coupons and not counting the interest upon the latter, which is demanded. These new six percent bonds are payable at the National Bank of Commerce, New York City, and dated July 1, 1882.
The court at once acted upon the vote of the people, and ordered 200 bonds of $500 each, with coupons attached, and 425 bonds of $1,000 each, with coupons, for the purpose of refunding. William H. Cock was appointed agent to look after the funding process. Mr. Cock, as financial agent, made October 9, 1882, the following report of his work:
For the above net reduction warrants were drawn, one September 4, 1882, for $3,000 and on October 9 one for $4,180.86 and one for $1,319.14, or a total of $8,000, to pay said exchange in favor of W. S. Little & Co., St. Louis. The difference of $664.5 I was not accounted for in the above settlement and it probably went for commissions.
Up to October 9, 1882, as per statement above, the old debt had been reduced and new bonds issued, as below:
The amount paid out in the reduction of the old debt under the compromise.
Previous to the compromise the old debt had been reduced to a considerable extent by the purchase at different times of the railroad bonds at a large discount and by the payment of interest coupons sometimes at their face value, and again at a discount. As far as the records show this discount or payment of the old debt has been about as follows, not all of the amounts being given, but the amount of cash paid for them:
This amount was paid at face value of the bonds and coupons and reduced the debt just that amount, less some cost added, the full pound of flesh being demanded.
The Discontinued Bonds
There were quite a number of bonds and coupons redeemed, and while the sum paid out is found of record, the total amount of the purchase was not made of entry.
For instance, Charles B. Wilson expended $11,946.80 in cash in the purchase of coupons and bonds. He gave the number of the coupons and bonds and his account was correct, but there were so many of them and of different dates that it was a good job to figure them up. Again an entry was made that two bonds were purchased for $700 and five were purchased for $2,050. These were $1,000 bonds but how many coupons were attached, if any, was not stated. The purchases showed a pretty good bargain, one being at about 30 percent and the five at a trifle over 40 percent, the over-plus, probably, being commission on purchase. However, the reduction of the debt can be got at pretty close. It is given below:
Sale of Missouri, Kansas & Texas stock invested $84,666.57, reduced the debt $183,301.77, but of this $117,000 only were bonds, the remainder being coupons, judgments and costs. So from these purchases we have a reduction of the principal, that is in bonds of $169,000, besides the bonds purchased by Mr. Wilson, say a full reduction of $180,000 of the principal; the balance being paid in coupons or interest. The county court have in new six per bonds $525,000.
This it is hoped will be sufficient to redeem the old bonds and coupons at the compromise rate of 75 cents on the dollar.
What It Cost
The total expense to the people of Henry County in this railway business, and for the present railroad facilities enjoyed by them, is here given and itemized. There is no disputing the figures, for they are of record, but probably few of the citizens of the county were aware of the fact, and the people will here see just what they have paid.
For this sum the people have a railroad 37 4-100 miles long, which is all they will ever get for this money. This is in round numbers, $28,000 and a little over per mile, and notwithstanding they must pay this sum, they are in the same position Satan was when he took a certain person up into a high mountain, and offered him all the world, etc., and the poor d--l didn't own a foot of it. No mention is made of $183,000 and odd, paid by Judges Gantt and H. W. Salmon, as the amount so paid was paid by sale of stock. The further exchange of bonds will be chronicled as made up to the closing of this history.