New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-05-01
Tile LOUISIANA DEBT

Louisiana also entered INTO a compromise
contract with her creditors under which new
bonds for 90 per cent Of her debt were to he Is
sued in exchange for her outstanding ones.
To make tho contract effective and binding she
possed An act in 1874 levying a perpetual
annual fax for the payment of the interest and
fine redempton of the principal, and made the
use of the revenue derived from this tax for any
other purpose by the officers of the state ana
any obstruction to the execution of the act by
any Judge in the State renal offence punish
able by Imprisonment not exceeding five years
and by fine not exceeding $1,000. Sho went
further than this. In order to satisfy her cred
itors that perpetual faith should be Kept with
them. she adopted an amendment to her c0nsu-
tuition which declared the compromise act to
be valid contract between the State anu each
and every holder of It's bonds. which the state
sbould in no manner and in no wise impair that
said bonds shall be n valid obligation OF the
State in favor of any holder thereof, and no
"court shall Join the payment OF the principal
or interest thereof, or the levy and collection
of the tax therefor to secure such levy, cOllec-
- tion and payment the judicial power shall be
" exercised when necessary. The tax required
" for the payment of the principal and interest
u of said bonds shall be assessed and collected
- each and every year until the bonds shall be
" paid. principal and interest, and the proceeds
" shall be paid by the treasurer of the State to
q tbe holders of said bonds as the principal and
interest of tho same shall fall due, and no FUR
" Their legislation or appropriation shall be Ie-
"ouSite for the said assessment and collection,
"and for such payment from the Treasury"
This act and the amendment to the cOnstitu-
ton were prepared by eminent counsel, and they
are certainly as strong as language could make
them. The prosposed issue being thus secured
by the act of the Legislature and by the consti-
tuition of the State, the holders OF the Outstand-
ing bonds accepted the compromise and twelve
millions of these bonds were surrendered
and new bonds for 60 per cent OF the
amount received in exchange therefor
Tins the debt of the State seemed to
be definitely and permanently settled, but
settled il was not. The State soon after de-
faulted in the payment of the interest on the
bonds. and In 1879 adopted a new con-
stitution and by what is called the debt
ordinance RENTED the coupon due in
January 1880, and reduced the interest
on the bonds from 7 per cent to 2 per
cent Tor flVe years, . per CcnJ lOI HllttH yediS
and per cent thereafter. 1t will he perceived
that by this new constitution the amendment OF
the former one and the contract between the
State and her creditors has been expressly vio-
lated and yet this violation has been sustained
by a recent decision of the Supreme Court (Mr.
Justice Field and Mr. Justice Harlan dissent
ing), and the bondholders are now compelled
to accept the reduced interest or receive moth
ing. The effect of this decision has been to re-
duce the value of the bonds from nearly PAL
TO about sixty cents on the dollar; it IL ques-
tionable that any considerable amount could be
sold at fifty. If the decision had been different
thew would now be selling at premium. We
are sorry that we have not room to present to
our readers the dissenting opinions of Justices
| Field and Harlan. They are both luminous
| and able, remarkable not only for their ability
| but for the language in which they are ex-
| pressed.
| To us the decisions in both cases seem to be
utterly inconsistent with previous decisions of
| the Court to set at naught one of the most I'M
| portant provisions OF the constitution and to
| have very decided leaning toward the doc
| trne Of notification, to say nothing of the per-
nicious influence which they cannot fail to have
upon public and private credit. One thing is
certainly established by these decisions (para-
doxical as it is) which everybody ought to
| know that while States are prohibited by the
Federal. Constitution. the supreme power in the