The Republican journal., 1881-01-06
The Memphis Bond Case.

The decision of the United States Su-
preme Court in the ease OF the holders OF
bonds of the city of Memphis, Tenn, OF
which summary was given in the jour
nal of the 23d ult., has created quite
sensation in this vicinity, and i'll some
instances holders Of corporation bonds
have been disposing Of them as rapidly
as possible. There does not seem to be
any cause for alarm, however. These
bonds are as good to-day as they ever
we're; and nothing short Of downright
reputation can affect their intrinsic val
ue. Our lawyers differ as to the effect OF
this decision. One holds that il the city
government should refuse to appropriate
money to pay the interest or the bonds,
the bond holders would have no redress,
while another argues that in such case
the bond holders could levy on individual
property. Refusal on the part OF any
corporation to pay interest on its indebt-
edness would, however, be neither more
nor less than Reputation and we do not
believe that the decision Of the Supreme
Court is intended to aid SO dishonorable
a procedure. The Rockland Free Press
publishes a very sensible article on this
subject from which We quote as follows =
Now the question arises, what is to be the prac
teal effect Of this decision That will depend
largely II not wholly upon the people who coustl
tute towns and cities. Personally we have no
collection of a case III New England in which the
public pro erty or that of citizens was taken for
public debts. Probably such eases have occurred,
but they have not been common, and creditors II
they attempted to obtain their dues by such
method must have found ii extremely unsalstac-
tory. Wiscasset N Lincoln County, has failed to
pay the interest on her municipal liabilities, still
creditor has or would levy upon property 10
satisfy his claim. Inc faith Of the citizen must
be relied upon, and that only. Practically it has
been so heretofore though theoretically differ
ent doctrine has been held If the decision in the
Memphis is reported, the New England
theory dies. but really it will change nothing, eX-
cept to make creditors more cautious and remove
from the denlzens of ins0lvent towns possible
annoyanc" which was rarely, if ever, experienced
For time, this decision in the Memphis may
create some disturbance IN the relations between
municipalities and their creditors, but 1t will soon
pass away, and The usual course be resumed.
Towns ana cltleS cannot alfDfu 10 De llsnODeSl II
they were disposed to, and we believe the great
majority OF men desire TO be honest Like an in
dvdual, the municipality which violates its iinan
cial obligations, soon loses the power to borrow be
cause nobody will trust it Yet all are liable TO
find themselves IL circumstances when they need
to borrow Therefore common prudence, and bust
ness pOlicE. If no higher motive, Will actuate fair
dealing hss1nunicipallties towards their creditors
The Rockland Opinion argues that IN
der this decision municipal or county
bonds necome simply debts OF honor,
which cannot be collected by law at all,
and that it is only incumbent on the peo-
pie who bear the burden of these debts to
act honorably and fairly toward the bond
holders. 1t says further
The latter cannot now exact their pound of flesh
regardless Of the fact that the life blood of the
people goes with it. In view of this decision our
judgment is that no board OF municipal officers
have a moral right to assess taxes above rate at
which business enterprises can prosper for the
purpose CT laying interest municipal or county
bonds No people should be taxed more than -
on 81 900 tor state, county and municipal purposes
higher rate Of taxation means ruin and nothing
else. No people have right to plunge themselves
into bankruptcy to pay their debts, if we may be
allowed the hibernicism All debts should there
fore be scaled down to a point where the people
can pay the interest without imposing higher
rate OF taxation, and still allow for the necessary
municipal expenditures