Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1914-03-31

OF these debts the report, which is
chairman, says:
1T is indeed deplorable that these
prosperous and progressive states of
the great American union take no steps
to settle their defaulted debts, and it
seems. to say the least of it, an anon
ally that the United States should in
sist on compliance with its obligations
by a country like Santo Domingo when
so many of the states within its own
borders are not observing their own
engagements.
The excuses put forward by these
states for non-payment are manifold.
but they may be generally classed I'M
der three heads:
I'D South Carolina pleads that her
defaulted obligations were contracted
while the state was being administered
by the federal government after the
Civil war. The answer to this, of
course, is that the bondholders have
nothing to do with differences between
the states and the federal government.
One or the other must be responsible
for the issue of the loans in question.
ana II Is unfair tue Stdlc
should refer its creditors to the fed
eral government and that the federal
government should refer them back
again to the state Tennessee for many
years adopted the same attitude as
North Carolina: but the former was
wise enough TO realize that no state
can maintain its position in the world
of credit which attempts to justify the
of obligations by excuses
which, in the case of individuals, would
not be tolerated in any civilized court
of law, and therefore came to settle
ment with the holders of the bonds.
"(2) Louisiana alleges that there
we're Irregularities of some kind or
another in connection with the issue
Of most of her repudiated bonds. 1t
of course. put an end to all
credit if a state, on discovery that its
own officials had acted incorrectly in
the course of the issue of a loan, re-
pudiated all responsibility for the
money obtained from the public. |
There is, however, one issue, or part
Of an issue, known as Baby bonds,
which not even the fore
going excuse can be pleaded. In this |
case, in the state of. Louisiana in ac-
cordance with the states constitution, |
and although they are specially Sc
cured on arrears of taxes collectible !
Dy the state. which, it is admitted, |
diverted to other purposes, payment |
IS denied on the astonishing plea that |
he bonds were not guaranteed by the 1
state.
"C3) Mississippi's excuse for not |
her defaulted debt is /
worst of all Between 1881 and 1888
he state issued two loans, for which |
she obtained full value and the pro-
leeds of which were invested in the
and development of
wo banks So long as the banks
lourished and made good profits the
interest on the loans was paid; but
when, owing to over-speculation, bad
lines came and the banks got in diff
iculties, Mississippi made this the ex-
,use for ceasing all further payments
o the bondholders. For state to re-
,udiate its obligations to its creditors
because the investments it chooses to
make with their money do not turn
nut profitably is absolutely indefensi-
lie. and, as far as the council are
ware, Such an argument mas never
,een resorted to by even the most
backward of the big Spanish-Ameri-
an republics"
The report intimates that propos-
/ is now before the foreign Office to
ecure a settlement OF the claim
gainst Honduras. but very little hope
5 entertained OF II being successful.
he amount due by Honduras. includ-
ny interest is roughly s1z1,0o,000. AS