Message of Governor James S. Hogg to the twenty-fourth legislature of Texas Page: 7 of 48
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MESSAGE OF GOVERNOR HOGG.
a forfeiture of the corporation's charter; second, the particular act is
made void; third, each director, and the president, secretary and every
other official who knowingly takes part in the illegal transaction, is made
a felon, and subject to imprisonment in the State penitentiary for the
Before the enactment of this law, it was the custom of railroad companies
to add millions upon millions of dollars to their bonded indebtedness
annually. For many years the records show an annual increase of
from ten to thirty millions of dollars to their interest-bearing bonds,
without any corresponding benefit to the property or the public. They
were simply issued for speculative purposes, and then floated in the markets
of the country as the professed work of good faith. Thus railway
securities became so mingled with "wind and water," fraud and rascality,
that the best of them were under more or less suspicion. Now
such is not the case. Henceforth every such bond will have the stamp
of honesty on it. It is a matter of congratulation and free comment,
that.though the law has been operative for about eighteen months, there
have been no bonds issued by old roads since it took effect; and that, for
the construction of new roads, the five per cent bonds now being issued
under it are in demand at par. Instead of the effect of the law being to
prevent the construction of railways, it is a pleasing fact to note that
to-day more railroads are being built by reason of it in this State than
are being constructed in any other State of the Union under the old system.
Under this law honest investors are saved from legalized robbery,
and Texas people are guarded against the most certain, insidious, unjustifiable
method of confiscation that was ever concocted or permitted
through the abuse of corporate franchises.
TIlE MUNICIPAL BOND LAW.
The Legislature two years ago also passed a law limiting the execution
of county, city, and all classes of municipal bonds to actual public
necessities, so that the spirit of extravagance can no longer be found in
them. Before they can be circulated, they must receive the certificate
of the Attorney-General to the effect that they are in compliance with
law, and then they must be registered in the office of the Comptroller.
After being sold, they can not be impeached except for fraud or forgery,
and all persons guilty of those two acts, or either of them, in relation to
such bonds are punishable by confinement in the penitentiary.
Since the adoption of the law, the rate of interest on bonds executed
under it has been reduced, and the securities themselves are purchased
sometimes at a premium, and never less than par, for investors know, to
a moral certainty, that they will be paid.
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Hogg, J.S. (James S.). Message of Governor James S. Hogg to the twenty-fourth legislature of Texas, book, 1895; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth5862/m1/7/: accessed April 21, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .