Indiana State sentinel. [volume] (Indianapolis) 1841-1853, 1844-03-28
Ti,c Ele,.ts of thc 40.

hNtfAiff ~ uIlraitN III 'N '""f N%
American Review. a lealing periodical. From this article
we copy the following extracts, fr the information and
consideration cf our readers.
Concerning the origin f ,hc debts Of The States, the
Review makes these remarks:
Great injustice must he done 10 the people ct this
country. If tie general state Of meas minds aud Of imam
cial al,irs !. lrt out # view. in considering the suij- 1t Of
their Indebtedness. They have hlen rash, but II was OF a
time when Tashnc.s was epidemic. They have been i'm.
%provdeni. bur 1t was when prudet &c was generally eonsd-
cred lttlc better than uarpw-miUdrd ultdliv. Their fault
may have been very gfca', bat II was very general, and Il
was a fault Of which the creditor largely part oh with the
debtor. II It was rash aud Improyldent IN thcm % bor-
row, II was rash and improvident ia others TO lead TIL IN
these cases, h leuder- had aluostas good means OF know
Ig he grounds Of credit as the borrowers had The boz
roxers were States. whose resources aud means Of pay
mcnt are necessarily made public. 50 that al may kno"
them The works on which the money was 90 tc eXpcn1-
ell were public works their character and purposes were
known; and, when The loan was obtained Tor a speeIhe
aud dcclared olieei, which II often was, tie reasonablencss
and the probable rcsuls # The undertaking were open to
tie judsmc I Of ii intelligent men. In our opinion, II
was the duy # tie lender u exercise his Judgmeai on
these points II Is reasonable to expect, thai creditors viii
not ouly lie ,igiant. hut suspicious; for those qualities
naturally grow out ui the relation Oh debtor ana creator
when 1t isfrnci, AMI they sprng up Whenever an at
tempt j. made - form II. The fears a cfclrors. afd OF
those who are asked % become creditors, not seldom lead
10 uo:rue judgments aud harsh constructions which are
net to he blamed. because thy contribute 10 ihe general
safety. But. when we find ra-hurss where we had "a right
to expect caution. and a blind c|onilcnce IN the place OF
n careful examination into means and f!ans, We cannot
doub, that the general inGtuaiion must be thereby increas-
Ell, and thnt they who have departed so widely ifom the
qualities which usually belong TO 'heir POSITION have uOie
much to produce he mischief
"I.et US not he niscoustrued into saying one word that
tends 20 affect the legal and moral obligation Oi any cum
tract made under these circumstances. What Ne have
said does not touch that obligation. TIE Paftes were com
reieut To make contracts. The borrowers were free States.
whose public acts were done by The responsible agents and
Inmcdiate representatives. OF the Who'll, pope. o. course,
.s-I- a.. tho. hot srnil a I.rra AT . L.
uation mi.ht exist a. would relieve one al the parties
from the obligation Of is contracts. his would he 10
stultfy a sovereign State 4 process which would certainly
he entirely new IN the history Of pubic law. aud one w
which, y presumed. no state would very wiling y submit
Cur remarks have 10 reference 10 tine binding force oi con-
,acts. They are applicable, not 10 the Will TO pay but To
The ability 10 pay. They tend II excuse taSoleeHcy, not
Eamd'
The case Of Mississippi is stated in the following man
ncr:
Tie word repudianon. in tie sense in which it is no"
commonly used. was first al pied IN the state i Missls
sippi II occurred, Tor the first time, we believe, M IL
,a,s.,oc Of the Governor to thr Legislature # that state
IN January, 1871. IN which he aI'crs TO the plan OF "kE
PrD1ATlNG the sale Of certain OF the STATE b'nds. on &C
coun, Of fraud md iltegaiity." The material facts IN re
ference to the action Of this State upon the subject of IL
debt. are these. la 1888. the State chartered The Missis
sippi Union Batk. AID, IN order to provide capita ior Ia
institution, it was enacted IN the charter. that the director
might borrow SIS. 100000 and that tie Governor nigh
issue seven thousand five hundred honds, for s2.0OO each
bearing five per cent. interest. and rcdcrmahle IN twelve
eighteen, and twenty years, and &c lSeT them To The olhc'I
&C ,ka, institution from time - time. IN proportion to III
amounts subscribed Tor hank stock, the Frcc Of which va
10 be secured g. the satisfaction If the directors. III
bonds were made negotiable by the ENDORSEMENT o. 10
president aud cashier # the bank. BY an additional az
tie Ga,encr was au.haf zei 10 subscribe. ~ behalf Of ii
State. for $1,000 600 Of The stock of the bank aud he d'
81. In June. ISIS. he delivered - the bank two iho'
sand five hutdnd bonds, amounting 10 - OOoOOO' pay
lie in tweety years from Tie 9th dy OF FeofuaTy, le5
and barring frc PER cent. intcic est II or Their Gaie- II
charter required he hank 10 appoInt three cummlssi5ne
fr the sale Of tie bonds. and imposed this restriction q
their authority. that The bands Should MT be said md
their par raiue. Ga he 18Th Of august, 1888. The COZ
m ssioner, sold all the bonds 10 ar. ode for the sum
s. 600 600. pa, able In five equal iustalments OF one n
loa each. on the first day of November, 1888, and the !
DAYS Of January, March. MAY and July, 1889, WITHOUT I
feresf This money was punotua ~ PAID to TIE Ia,
which went into operation and before January ia
lost all lis capital.
Now we feel constrained to say. that. if this matter b
rested here. the State Of Mississippi would not he hga
hound 10 nav this debt We think The commissioners
not conform To their authority IN maxi 9 the sac. IN
were. IN terms. prohibited from selling the bonds u'i'
tier par value. The Par value Of a bond ! 5 The a"ol
which l. due upon II and includes interest as well as If
Gina. This seems to be the 4 lr meaning Of the words
the charter. and any other construction would render
restriction Itself nuga;ory ; since, by allowing the inter
10 accumulate long enough, the commissioners would ha
had il in their power 10 obtain s5.oOO.CO0 for the bon
though, al the very moment when they sold them, y ,Ou
600 might be due upon hem. They made such a sale
not to receive in cash an amount equal to the Liability OF
State on the bonds. and Therefore we believe that they
ceedsd thrir auth ority. We think. also. that the ; ate
the le .al right TO insist, AT a proper time. on this wan
authority, even ssainst the subsequent purchasers Of u
bonds; because any one who takes n title through
agent Is bound hy law 10 look to he authority deeg'
10 him. ard 10 see that he acts or has acted within rs sc
IN making The title.
Bu, We need hardly say. that tie question. wheth
sovereign State shall avail itself If It's legal lights deps
men considerations quite distinct fOm The mere NJ
themselves. Rules Of jurisprudence are necessarily
.,sI and. being general. they may, and sometimes
x,rk s,me i~iusice. y Safe, Ike an individual. . ug'
rl,ee itself cutie above these general rules, and cons
only the is-tice Of The particular case IL Is que L
own dignity. to the magnitude Of tie case, II the an
anee of preserving tie great fountain 81 power ana
&C. ,urc that the most enlarged and liberal rules OF
~ should he observed Itisdue 10 us pnsii on oe'ns
a patty in interest and a Judge, 10 venture on no dee
which will admit Of question: And SO te state 0'
sissippl must have thought. for 50 1t acted.
In responding TO The message Of the Governor In !
arv. lsii, the Legislature resolved,
First. Tina, the State Of Mississippi is bound t
holders of the bonds Of the State. sold on account Q
hank. for the amount Of the principal aud interest.
"Sec,nJlv. That the State Of Mississippi EiH pay
hands and preserve her faith Inviolale.
Thirdly, That the insinuaiion. that the state OF
sssippi would repudi ate her bonds and violate hr p'
faith, is q ca. umny upon the justice, honor anu d'sa
the state"
These resolves are such as might be expected fro
I.gislature Of a free State under such circumstance
fact which we have no, yet stated was known o IN
ri.ls,ure, and. in oar judgment. Is s1ihcien' 10 se'
question. The Legislature me, IN 1889, Tor me mrs