Evening star., 1931-12-27
HUGE DIXIE DEBTS
|. ARE REVIVED AGAIN
Discussion of European Re-
pudiation Likened to Civil
War Situation.
BY FREDERIC WILLIAM VILE

BY FREDERIC WILLIAM VILE.
With European countries now openly
talking of defaulting on their huge
debts to the United States when the
Hoover moratorium year expires in july
1882, discussion has been revived of the
of their bonded indebted
ness by eight Of our Southern States,
The Commonwealth in question are
Florida, Mississippi, Alabama, Arkansas
Georgia, Louisiana, North Carolina and
South Carolina. Such portions of the
indebtedness as were contracted after
the Civil War were saddled on these
States by their notorious carpet-bageer
administrations.
The gross amount of the repudiated
principal is in the neighborhood of
100000. Accumulated interest from
1881 to 1871 is calculated to total an
other $500, 100000. Every time the
World War debt problem becomes a
matter of international discussion. these
unredeemed obligations of Dixie are re-
called and trotted out for American dis
comfiture.
An organization in Great Britain
known as the Corporation of Foreign
BondholderS Specializes annually in
drawing attention to the subject. It's
forthcoming yearly report, in light OF
current events, is sure to return to it
with more caustic illusions than ever.
Legal Action Blocked.
Although there is no legal obligation
upon the part of the Federal Govern
ment OF the United States to recognize
these Southern State debts, it is claimed
by authorities that it is the Government
at Washington which prevents the
holders OF these bonds (who are mostly
Europeans from enforcing payment OF
them at law. This is said to be impos-
slole under the Eleventh Amendment to
the Constitution, reading:
The judicial power of the United
States shall not be construed TO extend
10 any suit in law or equity commenced
or prosecuted against one of the United
States by citizens of another state, or
by citizens or subjects of any foreign
state"
Walter Lippman. special writer on the
New York Herald Tribune staff, is now
deVoting considerable attention to the
Southern debts which he describes as
things which should induce people who
live in glass houses not to throw stones.
Mr. Llppman contends that. in respect
D the debts incurred in Dixie under car
rule, the moral obligation
rests not upon the Southern States but
upon the Union" He also holds to be
tha argument of South
ern Spokesmen that their States should
NOT he hold liohln
tul debts forced on them by Federal
policy. But, from the viewpoint of the
many of them British. -
adds Mr.. Lippman. the reputation is
not excused by this fact"
Facts Summarized.
Writing in Foreign Affairs three years
ago, Charles P. Rowland director of
res arch of the Council of Foreign Re
lationS in New York. summarized the
facts and figures of the repudiated debt
situation as follows:
Pre-Civil War Debts:
Florida. About $4,000. 900 principal.
of which S3900000 was to provide cap
lfal for the Union Bank of Florida.
These bonds were sold in Europe be-
tween 1884 and 1899. The other re-
pudiated bonds We're in aid of the rail-
roads, the date of issue being no longer
Mississippi. $4,000 900 bond issue of
l83l-l833 in aid of the Planters Bank.
IS ,0Ol 900 bond issue of 1888 in paw
ment for shares in the Union Bank On
the first issue a proposal to paw in
terest was defeated by popular referen-
dunn in 1852 On the second ssuo.
though the Mississippi Supreme Court
sustained the validity of the bonds and
the LEGISLATURE wished to recognize
them. the governor recommended re-
and was supported bv a popu-
lar vote In 1875 the repudianon of
these bonds was made part of the Mis-
sissippi State Constitution.
Other Debts Listed.
Post-Civil War debts:
Alabama-Sl800O,OO 900 of railroad aid
bonds were issued or indorsed after the
war Some of the issues were taken
up by the funding act of 1876 The
repudiated portion is about S13000.0O0
Arkansas-Some of the debt goes
back to 1888, when the State chartered
a real estate bank. Most of it was Gre
ated by the issue of railroad aid or
levee bonds after the Civil War The
oupl SlIle SOuIl uSCldTeO some OF IEe
railroad bonds unlawful.
Georgia-Bonds issued chiefly for
railroad guarantees after the Civil War
There Is said to have been corruption
in some Of the transactions connected
with these bonds Estimates of the re-
pudlated bonds vary from $9863, 500 to
$13, 100000
Louisiana-The States debt was in
creased about $20,OO0,0O in 1871
Bonds were issued to provide State
funds, to aid railroads banks and the
city OF New Orleans. In 1912 a ref
erendum on repayment on some of
these bonds was rejected by popular
vote.
North Carolina-The bonds were
postwar railroad aid and special tax
issues. In 1870 the annual interest
charges would have amounted to 81
100000. The technical objection to
payment was that the State agent ex-
ceeded his powers.
South Carolina-The repudiated is
sues are postwar refundings of pre-
war issues and partly railroad aid
bonds. The total amount repudiated is
not clear.
Many Americans who know of these
unredeemed Southern bond obligations
think of them as Indebtedness incurred
by the Confederacy. This indebted
ness. having been made payable in
confederate currency and so under
stood when American and foreign in
Vestors accepted the bonds, naturally
was lost when the collapse of the Con-
federacy destroyed the value of its
money and securities. The Southern
debts which still rank as repudiated in
Europe, because the commonweaIths
which incurred them are still in ex-
istence and solvent, are exclusively
those of the eight States above emu