Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-23
MONEY SEEN
ASCRED|T DANGER
Economist Fears Period of
Imitation viii Result From
Low Rates.
BY JOHN F. SINCLAIR.

Special Dispatch to The Star.
NEW YORK, April 23.--"Beware Of
easy money" says DR.. Benjamin M. An
derson, economist Of the Chase National
Bank.
Or. Anderson fears that not only in
dividuals, but many cities and States
will increase their debts unwisely, bor-
rowing simply because money is cheap
and not because 1t can be used advan-
tageously.
While easy money is a stimulant to
business, he says, 1t may also become
an intoxicant. Prosperity resulting
from this kind Of a stimulant is likely
to prove very costly in the end.
The question of easy money Is one OF
the most debatable In finance. Some
believe that it is the only hope Of BUSH
ness. Others point out that when capi-
tai can be easily secured 1t has a tend
ency to extend credits too much, which
results in initiation, rising costs and,
finally, in the collapse Of business.
DR.. Anderson contends that easy
money is q good thing when used In
moderation, but otherwise rather dan
gerous. Hence his warning.
British subjects are reviving their
claims to 1919 ,000, 900, face value and in
terest, which they say is due them on
bonds issued years ago by several Ameri-
can States. About $75,000,000 of this
sum represents principal, the remainder
being accruing interest, for approx
mately half of these defaulted bonds
antedate the Civil War. The other bonds
were issued during the reconstruction
period in thu United States after that
war.
In the British House of Lords recently,
these defaults were compared to the
repudiated Russian bonds issued under
the old Czarist regime.
Herbert Solow, who has written con-
siderably about the bonds issued after
the war, tells story Of three men buy
ing from Florida three railroads at the
rate Of $4,000 mile, with worthless
check and sum of money embezzled
from several North Carolina railroads.
He says:
"They bribed the Africanized Legisla-
ture and the carpetbag officials to grant
$4,000 mile In 8 per cent bonds to
complete, equip and maintain the roads.
OF these bonds. $4,000 900 worth were
sold in Holland. The spectators
pocketed all but 5000 of the money
secured; the latter sum went to the
roads"
This story throws q strong light on
some Of the peculiarities of financial
transactions ct this period of American
history.
Have these bonds, which were repudi-
ated long ago, any legal standing now?
That question has been debated for
years. Many attempts have been made
by the European holders of the bonds
to institute suits for the recovery of the
money they believe due them. Such
suits, however, can only be brought in
the courts of the States affected, and
these courts have always refused to en-
tertained any actions at law.
Now and then an effort has been
made to interest the Federal courts, but
under amendment II of the Constitu-
ton of the United States the Federal
Government has no jurisdiction, for no
suit in law or equity can be conn
menced or prosecuted against one of the
United States by citizens of another
State or by citizens or subjects of any
foreign state"
An early effort to have Congress as
sumo part Of these repudiated debts was
rejected in q decided manner.
Still, certain Europeans insist on
bringing up the subject for discussion
year after year. The holders of the
bonds-and some Americans-think pay
ment should be made, but the settle
ments rest entirely with the States in
volved, and none Of them shows any
disposition to take the matter under
consideration.
Copyright, 1880. by the North American
Newspaper Alliance.l