The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1893-09-19
REGULATION OF STATE DEBTS


and it IL reported that President Cleveland
favors the discharge of this pledge Of TIE
platform. In view OF the near prospect
that the Democratic party is ready TO re-
tnra 20 state banking, the history OF the
Reputation Of state debts In the United
States Is a subject of timely interest. as
state bonds or STOCKS are usually the basis
Of state banking. New York banking be-
fore the var rested on state bonds
The states which have in the past re-
pudGased their debts are Minnesota, Miehi-
gan, Mississippi. Florida. Alabama. North
Carolina. South Carolina. Georgia. Louisi-
ana. Arkansas. Tennessee and Virginia
Mississippi was the first state to practice
Reputation. Early in the forties she re-
fusal 20 pay one class OF bonds, aggregat-
ing s., 0o0.0oo which had been sold in
Holland, and in tire fifties another class
aggregating 100000. The first men,
toned S., 10000 of bonds were issued in
1888 in payment of 500 shares of stock in
the Union Bank of Mississippi, and the
second class OF bonds had been issued IN
1881 and 1852 TO the Planters bank. The
highest courts OF the state decided that
both classes of bonds were valid. but
the legislature Of 1872 passed resolution
to the effect that the state was under no
legskor moral obligations 10 pay the bonds
issued 20 the Union bank, and these were
accordingly repudiated. At the election
OF 1852 the question was submitted to popu-
lar vote whether tax should be levied to
pay the interest on the Planters bank
bonds, and majority Of 1900 against the
levy of such tax was returned. The
new constitution of Mississippi, adopted
in 1875. contained the following clause:
Nor shall the state assume, redeem,
secure, or pay any Indebtedness claimed
10 bo due by the state of Mississippi 10 any
person, association or corporation whatso-
ever claiming the same rs owners. hold
ers or assignees OF any bond or bonds
known as the Union bank bonds or the
Planters bank bonds"
Under the territorial government Flor
ida issued or Endorsed for banks. s., 900. 900
OF bonds which, upon entering the Union
as a state, she repudiated on the ground
that as state she was not responsible for
the debts contracted in behalf OF banks
and other corporations during her terri
torial life The debt contracted and re-
pudIated By Florida after she became
state was assumed in pursuance Of an act
passed in January, 1855. authorizing (as
subsequently amended) the issue of state
bonds to the amount of $i6. 900 per mile in
aid of railroads. Bonds TO the amount of
100000 were issued, but early In the
seventies the railroads defaulted In their
interest payments, and the state was
called upon 90 make good the deficiency.
Her courts decided that the bonds were
unconstitutional.
Aiabamas debt before the civil war had
been reduced to $3,445.0o0. During the
war she paid the interest due on the bonds
held In London, but paid no interest in
New York after January. 1881. In Febru-
airy. 1876, the state debt amounted TO $25,-
ga, 40, besides large arrears of interest. OF
tins debt Alabama repudiatcd nearly
SIS. 100000.
The debt of North Carolina in 1876
amounted to Sal, SAC. $50. OF this the iegis-
iature recognized only s2i. 10000. and even
these figures were cut down TO $ls. So, 6tJ
in 1879, when a final settlement with cred
itors took place. The recognized debt just
mentioned was scaled down to s5.0O6,6l6.
so that evea acknowledged creditors lost
nearly sl4,000.o0o Of principal. besides
millions OF unpaid interest.
In December, 1871. the state of South
Carolina owed nearly s29,0ooooo. not in-
Guiding bonds of the face value of SSH
900 pledged as collateral security for
loans. In Decembex, 1873. so-oalled con-
solidation act authSfiEed the exchange of
outstanding bonds and stocks of the
stste'for new bonds equal In amount to 50
per cent. Of the face value of those sur.
rendered.
Georgia also repndiated her "csrpet
Dagger" debt. The dent of Louisiana In
1888 was about 81. o0o. 600. and by 1871 the
total liabilities of the. state amounted to
nearly ss2,eo0,0oo. although an amend
ment of the state constitution had ex-
pressly limited the states power Of con-
tracing debt to s25,ooo,ooo. The excess
over the amount permitted by the consti-
tuition was OF course repndiated, and. in
is7s. the legislature provided for the re.
funding of the remainder in new bonds
limited TO SIS. 90. 900 and bearing per
cent interest The state was unable 20
pay this rate OF interest. and eventually
| MAY, 1881 constitutional amendment
Was adopted by the people accepting thu
| proposal of the bondholdsrs that interest
| on the new bonds should he Fixed AT per
cent. for the first Eve years and at per
cent thereafter.
Arkansas was defsui,er before the war
being unable 10 paw interest on bonds
issued 90 banks. ~ her debt accumulated
under carpetbag rate she rrpudiated hv
constitutional amendment about thirteen
millions OF dollars. which reduced her
debt in January. ISIS. 10 81. $4,000.
Tennessee's debt in 1851 was about sal-
0snoa0 In ls7t her debs Vas s.. ooo. ooe
In iSsa Tennessee scaled this debt. The
bonds Of the first category we're TO he
sealed a, Il and ~ per cent. and we're then
20 he exehanseshls for new bonds bear
| ing interest At 6. So aud 5 per cent The
bonds ofthe second class were TO re sealed
81 per cent. and 20 be exehangeahle for