Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-11-18
PUBLIC CREDIT AND THE DE.
FArrTTNG STATES.


The eleventh amendment to the con-
stitution of the United States provides
that its Judicial power shall not sex
tend 10 any suit in law or equity COM
menced or prosecuted against one of
the United States By citi-l
zens of another State, or by citizens or
subjects Of any foreign State" Under
the protection of this fundamental law,
the States are free from prosecution on
Their debts, and all contracts that
States enter upon become virtually OBJ
legations of honor only. Mississippi,
in 1912, was the first State to take an
undue advantage of this feature of SOW
ereignty, her bonds of 1929 and 1889,
on some of which she actually realized
thirteen per cent premium, being still
In default. In 1916, Indiana followed
with compulsory compromise with its
bondholders, palmIng off on them some
S7,50O,OOO of Wabash and Erie canal
stock, which ultimately became worthless
on their hands, as the canal system
gave way before the more rapid rail-
way. Minnesota has S2,275,0 900 of State
railroad bonds outstanding ever since
1858, which she still refuses to recog-
nize. Missouri. also, bas injured her
credit to some extent by paying inter
est on her ante.b, llum bonds in green
backs, although the contract called for
gold or silver" in so many words.
In its issue of the 14th inst, the
Nesc York Commercial aud Financial
Chronicle publishes carefully COM
piled table of the debts of the various
States, the footing Of which are as fol-
lows: Total amount, $SS2, 970,5l7, of
which there is held abroad S92, 924, 900,
or nearly one-fourth; the total bonds in
default including Louisiana and Vir-
ginia, which pay fraction of interest)
are S164, 732 900, of which S54,174, 900
are held abroad. Tennessee is not
placed among the defaulters, the last
Legislature having provided for m
terest payments. She is credited with
total debt of s27, 100000, including
some six millions Of endorsed bonds of
solvent railroads which meet their own
interest. The amount of Tennessee's
bonds held abroad is estimated at
5000, 900.
The s164, 000, 900 ON which no inter-
est is now being paid, Is distributed as
follows in round numbers: Alabama,
S2l, 900, 600; Arkansas, Sl3,OO0,0OO;
Florida, 100000; Georgia, S11, Oeo,-
600; Louisiana, s24, OOO, OOC; Minnesota,
100000; Mississippi, 100000;
North Carolina, SIS 100000; South
Carolina, S1S,0O0,OO0; Virginia, $780,
600, 900, one-third of which she insists
belongs to West Virginia After
abiding to the cases of Mississippi,
Indiana and Minnesota before the war,
the Chronicle comments as follows,
showing an earnest disposition on the
part of capitalists to meet half way all
honest efforts of the unfortunate car
pet-bagged States of the South:
All the other States in default have
been embarrassed from circumstances
arising out of the war of the rebellion
and the disorganized condition of af-
fairs under the process of reconstruc-
ton, including in some of them the
unfavorable elements of carpet bag
rule and negro supremacy. These
States are entitled to the utmost con-
sideration, and wherever they make the
least show of offering their bondhOld-
ers a fair proposition, with any salts
factory guarantee of its fulhllment,
their proposals, we believe, will be
readily accepted. The great difficulty
with many of them is in the fact that
the State debt question is a political
football, and a proposal made in good
faith by one party is likely to be over
thrown on a change of administration.
a few of the States are really
unable at this time to shoulder their
whole debt, including endorsements,
without ruinous taxation, and Just
compromise with their creditors is nee
essary. A great part of this debt, in
some States, has been incurred by Civ
ing assistance to railroads, on which,
in most cases they have some lien.
Wherever the bonds have been issued
In clear violation of law, and under
such circumstances as to charge the
purchaser with knowledge of the fraud,
or even with neglect In not ascertain
ing it, the maxim caveat enptor should
apply, ana the States are justified In
not recognizing the bonds. But, In
applying this rule, the construction
should always be most strict against
the State, giving to innocent holders
of bonds the benefit of every doubt.
Under this rule, part of the bonds of
some States might, perhaps, be found
fraudulent and void, but not a large
proportion of them. As to the valid
portion of the debt, fair proposition
ought to be made to bondholders with
out delay; every month that passes
without any sort of recognition of their
obligations throwsa further imputation
of bad faith on the States in question.
NEW YORK's COMMERCE IN PERIL.
The merchants and press of New
York may well view with grave appre-
tensions the perils which now threaten
the commerce of that city. Fully
aware of the fact that no question more
vitality concerns her future than that of
controlling the transportation of West
ern products, they are moving heaven
and earth TO preserve the supremacy
which she has so long maintained.
Unfortunately, however, they are
thwarted in their endeavors by the mar
row and illiberal policy of the great
railroad corporations, and the conse-
quence is, that the danger is imminent
that Philadelphia, Baltimore and other
cities, will gradually absorb large
portion of the trade which has hereto
fore gone to New York. The railroad
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