The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-01-27
Timely Ala for the south-southern
state Debts.


The meeting Of solid men of New York,
consisting of eminent bankers, merchants
and citizens, held in the Clearing House on
Thursday, and reported in our columns
yesterday, must be regarded-if we may
borrow a phrase from the first of American
orators in one of his speeches on the Bank
rupt law in 184O-''as a green spot In the
midst of the fiery deserts of party strife, on
which all may meet tremendously and
| anlcably." There was no political par
tisanship in the Clearing House meeting,
as is attested by the selection OF
the venerable William Cullen Bryant
as its presiding officer. 1t is noteworthy
circumstance that this meeting was held in
the very midst of the exciting and absorbing
debates in Congress on the counting OF the
electoral votes, and that there was quite as
large o proportion of republicans as OF
democrats favoring o liberal and mag
unanimous treatment of the Southern States.
In spite of the late heated Presidential can
vass, in spite of tho grave and alarming crisis
which arose out of the uncertainty OF the
result, it hos been possible to secure can
did and friendly hearing for the distressing
financial condition of the South.
The Southern States are staggering under
an accumulated burden of debt which they
have no resources to meet. The bonds OF
some of these States are quoted in the Stock
Exchange as worth only ten cents on the
dollar. On some of the Southern State
debts the accumulated interest equals, or
nearly equals, the principal. They do not
intend to repudiate their obligations, but it
il found impossible to raise taxes to meet
them. Itiseasy enough for their Legislatures
to levy taxes. but the people are SO impover-
ishcd that it is found impossible to collect
them. When the property liable to taxation
is advertised for sale there are no bidders.
In many cases it is not worth the accumu-
lated taxes of three or four years; and even
when 1t is the people OF the neighborhood
are unable to pay the purchase money. and
generally refuse to bid because they may
be themselves in the same condition next
year AZ the unfortunate owners. When
there are no bids the owners are left in
possession. and feeling of mutual danger
and mutual charity prevents the people OF
the vicinity from adding to the distress of
their suffering neighbors. The consequence
is that taxes are not paid except by that part
of the community who are not pecuniarily
embarrassed T; and as the State governments
must necessarily 60 on the whole of the cur
tailed revenue is exhausted for current ex-
penses and nothing is left for paying inter-
20 oh Tot
more able to meet their accruing obligations
than o private insolvent debtor is to give
punctual satisfaction to his creditors. In
circumstances so distressing and humiliat-
ing what shall be done?
The insolvent laws have no application to
governments stood in the same position as
an insolvent private debtor the way out of
their endorsements would be easy and
simple. When citizen becomes insolvent
he surrenders all his property for distribu-
ton among his creditors, gets release and
begins anew. But State governments CAP
not make such q surrender. Their only re-
source is the taxes they levy on the
people, and when these cannot be COL
lected they have no available income. But,
although the insolvent laws cannot be ap-
piled in form in the case of State govern
ments, it would be wise to carry out their
spirit and substance. These laws are pre-
sumed to be founded in justice-justice
alike to insolvent debtors and their creditors.
But as q readjustment of the Southern
State debts can be accomplished only by
the consent of creditors, it is pertinent to
explain why the interest of the creditors
would be promoted by liberal compromise
They must consider, in the first place, that
the State governments cannot be sued.
Neither principal nor interest of any State
debt can be recovered except by the
voluntary action of the State Legislature.
1t must be considered, in the second place,
that an insolvent State government is as
powerless to meet all demands against it as
an insolvent individual, and that when cred
itors cannot avoid loss it is for their adj
vantage to make friendly adjustment with
honorable debtors. In the third place, the
creditors of the Southern State governments
must consider, in their own interest, how
wise and discreet it would be to consent to
the application of the same principles which
underlie the insolvency laws, which aim to
do equal ;-stice to the debtor and creditor
class. If the creditors of the Southern
State governments should DO SO short.
sighted and remorseless as to withstand any
adjustment they would expose themselves
to manifest peril. If these governments
are hard pressed, if they are pushed to ex
tremities, they will be tempted to rais'
money on new bonds at hard rates Of interes
secured by pledges of specific parts of tn
State revenue. Whatever is thus pledged
to new creditors would diminish by so mucl
the resources of the State for paying exist
ing bonds. It is for the interest of presen