Evening star., 1934-01-09
Monaco's Suit on Old Bonds
Laid to European Intrigue

While there Is a humorous tinge in
the discussion of Monaco's effort to
collect on Mississippi bonds, issued a
century ago and since repudiated, it is
felt by some Americans that the Incl
dent bears a relation to the efforts of
the United States to collect war debts.
The little gambling resort has asked
the United States Supreme Court for
permission to sue the State of Missis-
sippi. The old issue was put out in
connection with the establishment of
two State banks in Mississippi. and
payment is forbidden by the State con-
Stitution.
1T is not improbable" thinks the
Topeka Daily Capital, that it is act
ing as a stool pigeon for more import
ant states that have repudiated and
defaulted on their more recent debts
to Uncle Shylock'" The Capital sug-
gests that perhaps "Neighbor France
put little Monaco up to it," The Nor
gantown Dominion-News announces
that it places its money on Mississippi
in the present gamble" and suggests:
1T is mysterious how Monaco, with
her European environment, got hold
of the idea that one state should pay
another state a just debt. Monaco is
a small spot on the map of Europe,
and in the wide expanses of her neigh
boring territory, debt payments be-
tween nations are frowned upon. Even
token payments shrink and lose
caste"
The outcome" says the Rochester
Times Union, lis being watched with
intense interest in financial and diplo-
matte circles, as there are many other
issues Of State bonds now in default.
and the decision may affect them all"
The Wall Street Journal makes the
comment: "Monaco's prospect of COL
lecting may be debatable. although the
chance seems small For one thing
the Mississippi constitution by an
amendment of 1876 expressly prohibits
the State from paying off the two is
sues of which these bonds are part
1t is also sometimes claimed that the
eleventh amendment to the Constitu-
ton of the United States contradicts
Article III, section of the Consti-
tuition, which provides for extension of
Federal judicial power to all cases of
law or equity involving two or more
States, or State and a foreign gov
ernment. The Supreme Court once
declared its power to enforce a decree
on Interstate debt. but it did no more
than make the declaration The mat
ter OF forcing payment never came up"
The legal action, 1t is pointed out by
the Atlanta Journal comes from a
state which is chiefly supported by the
gambling syndicate of Monte Carlo,
where many an American has sought to
lend truth to the song about the man
who broke the bank at Monte Carlo
but with no success" The Journal AYERS
that lone would have thought Monaco
satisfied with the revenues from Amer
leans who seek the goddess of chance" /"
On the judicial phase of the matter,
that paper offers the opinion: Under
the Constitution. State can be sued in
Federal courts, without its consent. only
by the United States, another state. or
a foreign country. The powerful inter-
ests concerned in collecting the Missis-
sippi issues. of face value of 81 .000, 900,
not to mention a total of $4,000 900 of
defaulted bonds issued by Southern
States before and after the War of the
COS, adopted this means of getting
their case into court. The matter
of collection does not seem as far
fetched as would appear at first glance,
for in similar litigation between States.
notably in the suit of South Dakota
against North Carolina, the case was
considered and the Supreme Court ruled
for the plaintiff. There would appear
no means Of enforcing the verdict, yet
North Carolina ended by paying. But
it is of too great an irony that these old
debts Of the South should now be made
subjects for claims"
IF our Supreme Court" remarks the
Rock Island Argus, should rule that it
has no legal right to permit Monaco to
sue. such a ruling would be seized upon
by our debtors in Europe as condone-
ment officially Of the repudiation Of
American debts. The ruling would be
their excuse for repudiating their obi.