Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1875-07-15
.rHE nan F.TrHFoF srArES.

THE BAD FAITHFOF STATES.
@Ex-Secretary McCulloch fellowship
his views, recently communicated
through the Ne,v York Tribune, con-
corning the causes which have in
huenced various States to default IN
the payment of their obligations, with
a second letter In which the conse-
quences Of this bad faith are strongly
set forth.
Asking Why it happens that our Ma
tional credit is not higher than it is,
and, in fact, higher than
that of any other nation, Mr..
McCulloch answers-mainly because
the States have not acted honorably
with their creditors. The losses which,
within the last two years, have been
sustained by European investors
through the failure of railroad compa-
MES in the United States have been
enormous and distressing, and private
companies fail on this side the Allan
tic as well as on the other. So far, he
does not understand that any of our
private companies have attempted
to liquidate their debts. If they
had the disposition to 10 so they could
not. They can be reached through the
courts, and there has been no lack Of
fidelity on thepart Of judges in holding
corporations to their engagements. 1t
is not corporations but States, which lie
under the stigma of reputation. The
failure of railroad companies is IN
doubtedly what, just now, most severe
ly troubles investors and prevents the
success OF all loans except those which
are offered bywell known and dividend
paying corporations; but such failures
create in the minds of far-seeing and
thoughtful men no distrust of Ameri-
can credit comparable with that which
is created by the bad faith of sovereign
States.
We have not, Mr.. McCulloch thinks,
as fully realized the weight of the obi
cations that rest upon Americans as
citizens of States as we have those
which rest upon them as citizens Of the
Great Republic. We have not care
fully considered what must be the eff
feet upon the European mind of the
failure of States to meet their engage
ments. " A State can no more impair
by legislation the obligation of its own
contract than it can impair the obliga.
ton of the contract of individ-
uals. We naturally lock to the
action of a sovereign State to be
characterized by a more scrupulous
regard to justice, and a higher moral-
ty than belong to the ordinary tran
sactions Of individuals" Such were
the words Of Justice Mclean, a man
alike distinguished for his high sense
of honor and his profound legal learn
ing, in delivering the opinion of the
Supreme Court of the United States
IN a case which involved the authority
Of State to annul its contract. But,
while State can no more
impair by legislation the obligation
of its own contracts, 1t can, it
seems, not only impair, but It can vio-
late and virtually annul its contracts
by refusing to observe them. a State
cannot, under the Constitution of the
United States, invalidate its obliga-
tiOns, but it can lessen the value of
those Obligations or render them a dead
letter by simply ignoring them, par
tally or altogether, and relying upon
its sovereignty for its protection
against their enforcement, and this
is being done by many Of the
States. They do not undertake, by
laws Of their own making, to annul
their contracts; this they are prohibited
from doing by the fundamental law Of
the Federal Government. They donot,
for instance, repudiate their debts 10y
making laws for their abrogation, but
they render these obligations valueless,
wholly or in part, according to their
own good pleasure, by declining to full
fill them.
How far Tennessee has gone in this
direction it is unnecessary to explain.
The stage she has now reached is one
of the deepest humiliation to every
honest man within her borders, and
II