Nathaniel Hillyer. Egleston.

The North American review (Volume 139) online

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mons should be authorized to give it, by a certain majority, the
same force that it would have if it had been regularly enacted
by both houses. This would be something like what we in
America call passing a bill over a veto ; that is to say, when one
of three coordinate branches of the legislative power namely,
the executive has refused assent to a measure, the other two
may enact it into law by a certain majority of votes. If I have
rightly guessed the orator's meaning, he would have the sovereign
and the House of Commons together make a law that the Lords
have once refused to make. By what process the fundamental
law of England is to be brought into this condition, it would be
hard to say. One can understand what happened when a pow
erful leader, taking a file of soldiers, entered the chamber of the
Parliament, and pointing to the mace on the table told his men
to "take away that bauble," then turned out the members, locked



THE BEITISH HOUSE OF LOEDS. 561

the door, and put the key in his pocket. Short of that, however,
or of some similar process, one cannot understand how the peers
of Great Britain, unless they adopt a most remarkably self-
denying ordinance, can be shorn of their equal authority in the
enactment of laws.

Whenever the question here touched upon shall arise, it will
be fortunate for the nation if it comes to a solution in the life of
Queen Victoria. Her Majesty is thoroughly versed in the con
stitutional history of her kingdoms, and there can be no doubt
that her advice upon any matter involving a radical change in
the structure of the government would have great influence with
her people. It can hardly be that the function of the ministry,
which has long been recognized as a council entitled to shape
the ordinary measures of government, would be held to extend
to changes in its fundamental structure so as to oblige the
sovereign to remain passive, or to neutralize the influence of the
Crown, or to entitle the ministry of the time to use that influence
in promoting such a change. The theory and practice of execu
tive administration, which has prevailed for a long time, is, that
the leading men of a party that commands a majority in the
House of Commons are to be accepted by the sovereign as min
isters. In all ordinary measures of government and legislation,
the ministry is held to be entitled to shape the public business,
and to assume that the assent of the Crown is or will be given
to whatever the ministry propose. But this function of a min
istry has never been held to extend to such a change in the
structure of the government as the abolition or reconstruction
of the House of Lords would obviously be. There has never
been an occurrence that would stand as a precedent for requir
ing the sovereign to remain passive if the ministry were officially
to undertake to promote such a change. However great might
be their following in the House of Commons, they would have to
act in such an undertaking as individuals, and they could not act
as a ministry entitled to speak for and represent the Crown.
The sovereign would be entirely at liberty to differ with her con
stitutional advisers, and to make the difference known. In
Queen Victoria, her subjects of all classes would, on such a
matter, have an adviser that would be disinterested, unless
the proposed change should in some way involve the hereditary
principle in relation to the Crown, as well as in relation to one
of the houses of Parliament. If this should be the case, a revo-



562 THE NORTH AMERICAN REVIEW.

lution would be impending in which the sovereign would be
forced to make common cause with the peers. But the proba
bility of this is very remote. The nation is not likely to sur
render a constitutional monarchy, or to impair the principle of
the hereditary descent of the Crown ; so that when the question
comes in any tangible shape, whether the hereditary principle
shall be abolished in that branch of the legislature in which
it has so long existed, it will, in all probability, arise and be
treated as an independent question, in which the rights and in
terests of the royal family will not be otherwise affected than
as the aristocratic basis of the House of Lords is supposed to be
one of the great supports of the throne. But it is quite possible
to conceive, if a way could be found to bring it about peaceably,
that the aristocratic and hereditary basis of the House of Lords
could be removed without weakening the throne ; for in England,
and in a few other countries, the essential idea of a constitu
tional monarchy does not necessarily embrace an aristocratic
or hereditary element in the legislature.

In almost any conceivable form, therefore, in which the ques
tion of finding a substitute for the House of Lords can be antici
pated to arise, the nation would be likely to look to the present
Queen, if the question should arise in her reign, for disinterested
and wise advice. Whatever trifling dissatisfactions they may
have had with her, they know her to be a patriotic and able
sovereign, devoted to the welfare of her people. And through
out the civilized world, wherever there is a lover of mankind,
wherever there are persons enlightened enough to know how
the prosperity and happiness of the British nation affect and
must affect the welfare of the human race, the hope will not
cease to be entertained that they may be spared from violence,
and that all useful changes in their political and social condi
tion may be brought about peacefully.

GEORGE TICKNOR CURTIS.



RESPONSIBILITY FOR STATE ROGUERY.



IN a former paper the writer suggested a remedy for the
evils of State repudiation, viz. : the assumption by the general
Government of the debts of the delinquent commonwealths, with
a brief and incomplete argument in its support. His object was
to direct attention to the measure proposed, and elicit, as far as
possible, an expression concerning it from those who usually give
voice to public opinion. In that purpose he has been reasonably
successful. It is a somewhat curious feature of the discussion that
newspapers representing the German and other foreign elements
among us should seem more sensitive to the honor of the
country and more favorably inclined to the remedy proposed
than the native or " English-speaking n journals, many of which
have appeared to resent the imputation that we, as a nation,
might be open to the charge of dishonesty because of so small a
matter as a failure to pay between three and four hundred
millions of public indebtedness. The most frequently urged
objection was thus formulated by a New York daily :

" The writer does not seem to realize how wide a door he would open into
the national treasury. Why should the Government stop with the debts of
the States ? Why not go on and help out defaulting towns and cities ? Why
not take care of the debts of sundry weak-backed railway companies, whose
creditors would be very glad of its interference ? Why not settle for the late
enterprising firm of Grant & Ward ? "

In reply, it is enough to say that, in the cases of delinquent
towns and cities and railway companies, and of such unfortunate
houses as Grant & Ward, the Government has already made
ample provision in behalf of creditors. It has created courts,
with judges and sheriffs and receivers, and thrown their doors
wide open, that those having demands may come in and secure
all they are entitled to receive. If it had done the same thing
for creditors of defaulting States, to whom it is certainly under

563



564 THE NORTH AMERICAN REVIEW.

equal obligation, they would have no right to ask anything
more. But here is where "circumstances alter cases." The
Government gives those who hold unsatisfied claims against
States no legal means of redress. Why this is so, it may be
well enough briefly to explain. The popular idea is, that States
cannot be sued by individuals, because they are sovereign bodies,
and as such enjoy the immunity resulting from that old legal
fiction a veritable relic of barbarism that " the King can do
no wrong." The makers of our Government, however, enter
tained no such antiquated idea. They had no respect for kings
and their traditional privileges. They provided that States could
be sued on a money demand, like anybody else, as was decided
by the United States Supreme Court, in 1792, in the case of
Chisholm vs. Georgia, 2d Dallas's Reports. In that case,
through Justice "Wilson, the Court says :

" A State, like a merchant, makes a contract. A dishonest State, like a
dishonest merchant, refuses to discharge it. The latter is amenable to a
court of justice, on general principles of right. Shall the former, when sum
moned to answer the fair demand of its creditor, be permitted, Proteus-like,
to assume a new appearance, and to insult him and justice by declaring, I
am a sovereign State ? "

That is precisely what nearly one-third of our States are now
saying to their creditors. The ruling in the Chisholm case pro
duced a sensation amounting almost to a panic. The people in
that day were poor, and public burdens were oppressive. The
general Government had assumed the legitimate debts of the
States growing out of the war for national independence ; but
numerous claims like that of John Hook, so severely anathe
matized by Patrick Henry remained unsettled, and the popu
lar apprehension suggested innumerable suits and judgments
against the States, to be followed by onerous taxes. To cut off
these objectionable war-claims, the Eleventh Amendment to the
Federal Constitution, which inhibits an individual from suing a
State, was hurriedly submitted and adopted. That was the
only purpose of the measure ; the possibility of a State taking
advantage of it as a means of escape from paying bonded debts
not being thought of. It was a cowardly remedy, as well as
most inequitable, since the State was still left with power to sue
the citizen. To avoid the appearance of repudiation, an indirec
tion and a technicality were resorted to, and an important per
manent principle was sacrificed to a questionable expediency.



RESPONSIBILITY FOE STATE ROGUERY. 565

It will thus be seen that the government and people of the
whole country, and not the government and people of the delin
quent States merely, are responsible for the absence of a proper
legal remedy in behalf of the holders of dishonored State paper,
and for what must be admitted to be a serious defect in our
organic national system. Every government is under obliga
tion to protect the property of its subjects. Money demands
are property. If we cannot collect pecuniary debts that are
justly due us, for lack of adequate legal machinery and power,
we do not enjoy the benefits that a thoroughly good government
would provide. The foregoing facts would seem to furnish a
sufficient argument for the general Government's standing be
tween the creditor and the repudiating State ; nevertheless,
there are some special reasons for the same conclusion that
should not be overlooked.

First. That portion of the debt in question which is popularly
known by the designation of u carpet-bag,' 7 was really created by
the general Government in the names of the States, through
agents of its appointment. It was a fungus that grew under
the shelter of the national authority. Most certainly the people
of the States did not authorize it; and it is, perhaps, not alto
gether unnatural that they should object to taking care of it.
Doubtless the States are legally bound for the payment of bonds
that their organizations were used to create, and equitably
bound, as they received most of the benefits; but does that
exempt the general Government from responsibility for its
share of the business ? On which the greater obligation rests,
may be a nice question ; but it is very plain that the bond-pur
chaser, who paid out his money in good faith, ought not to lose
his investment because he has a valid claim on two parties
instead of one. If one will not take care of him, the other
should not for that reason be excused from doing so.

Nor are the holders of the "carpet-bag" bonds the only
losers through the general Government's action in this matter.
Those debts have caused heavy losses on other bonds. They
have furnished the pretext for most of those outrageous rob
beries, under the names of compromises, settlements, and re-ad
justments, through which perfectly valid claims have been cut
down from forty to eighty-five cents on the dollar. They have
done the repudiating States no harm, because they have not
been paid, but, on the contrary, have been the means of reduc-



566 THE NORTH AMERICAN REVIEW.

ing their other debts. In f act, the " carpet-bag " bonds have
been of immense service to the repudiation movement. Its
leaders have used them to fire the souls of their followers who
have rarely troubled themselves with nice discriminations
against all State liabilities. They have used them to figure up
a grand total of indebtedness, and so have worked on the fears
or compassion of the owners of other securities, and induced
them to surrender their holdings at heavy discounts. They have
used them to make apologists of outsiders, who have very gen
erally supposed, from the clamor about "carpet-bag" bonds,
that all, or nearly all, the discarded State obligations were of
that description. But for the a carpet-bag " bonds, it is quite
safe to say that most, if not all, of the derelict States would long
since have resumed payment in full, as was done by Missouri,
which was among the most heavily debt-laden States of the
South, as well as one of the greatest sufferers from the war, but
escaped a provisional government and a fresh bond issue at the
close of the war.

Second. The proceeds of the rejected bonds have mostly been
used in constructing railroads that have become necessary links
in great national highways. These roads are as truly national
works as the Union Pacific, to build which, and a good many
private fortunes with it, the Government supplied the money.
The argument on this point has been forcibly presented by a
"Western journal, in an article called out by the writer's former
paper, in the following words :

"Most of the old State debts were contracted under the reign of the
State-rights heresy, when it was held that only States could engage in
works of internal improvement, and that every such improvement must be
gin and end within State lines. It is now known that such improvements
derive their chief value as links only of larger chains that bind together
States, countries, and even continents."

Third. That the general Government has, by means of official
patronage bestowed upon active and notorious leaders in the
repudiation movement, given essential aid and comfort to that
movement in all the defaulting States, and strengthened and*
widened the sentiment upon which it rests, is matter of history.

Fourth. Without the protection of the general Government
in the course they have taken, the States could not have repu
diated to anything like the extent they have. No princi-



RESPONSIBILITY FOB STATE ROGUERY. 567

pie of international law is better established than that when
States contract debts with citizens of other States with which
they have no political connection, the latter have the right to
compel payment, even with the sword. There have been plenty
of recent practical illustrations of the doctrine ; the United States
have furnished some of them, particularly in enforcing demands
of their citizens against Central and South American republics.
The Alabama business was an exemplification of the principle
referred to. Only a short time ago, we almost got into serious
trouble with another government over a shadowy guano claim
in which one of our citizens was supposed to have an interest.
Our States have issued their bonds and sold them to citizens of
other countries. Why have they not been made to pay them ?
Everybody knows it is because the general Government gives
them its protection. But for that shelter, the State of Missis
sippi, which sold most of its bonds in England, would long ago
have been under a British protectorate, in the interest of bond
creditors, as Egypt is to-day. American States are the only
sovereign or semi-sovereign powers in all the wide world that
treat their creditors as if they had no rights that debtors are
bound to respect. They are the only powers of that sort in all
the wide world that dare to do so. Their position is most
unique ; they cannot be reached by the local law, and made to
pay like other debtors that have the ability, because they are
exempt from local law processes ; they cannot be reached by the
international law, because the general Government stands
between them and their creditors 7 governments. Secure behind
the nation's authority, they sit back and laugh to scorn the men
whose money they have received, and who hold their sealed
and solemn instruments. If responsibility and liability go
hand in hand, as they are supposed to do, in what position does
this state of things place our national Government ? Can it be
instrumental in preventing creditors citizens of its own coun
try, to which it owes something, and citizens of other coun
tries from collecting their rightful dues, and incur no moral
accountability ? Can it be honest and irresponsible, while fur
nishing a shield to cover others' dishonesty ? So far, we have con
sidered only propositions based on equity ; but there are motives
of policy that should not be omitted.

First The public interest. Like all new countries in course
of development, America has had to get much of her working
VOL. cxxxix. NO. 337. 41



568 THE NORTH AMERICAN REVIEW.

capital from abroad, and she must expect to do so for many years
to come. The usury she will be compelled to concede will depend
upon the condition of her credit not so much for ability to
pay, for that can hardly be questioned, as for the integrity of her
people. Every American railway company, or canal company,
or land-improvement company, that offers its paper in foreign
markets, either because sufficient investment capital can there
alone be found, or in the hope of obtaining cheap money, must
pay forfeit for the damaged standing of the defaulting States ;
and when we bear in mind that the funded indebtedness of our
railways alone amounts to three and a half billions of dollars,
and their capital stock to three billions, eight hundred millions
more, and that in a few years these figures are likely to be doubled,
we can form some idea of what the penalty must be. If the delin
quent communities sustained the loss, or the major portion of
it, their misfortune would hardly be a subject for mourning;
but, unhappily, the principal damage falls on those sections of
the country that supply the great projecting and constructing
syndicates, as well as much of the capital they operate with, and
which, knowing its value, try to maintain an untarnished record.
The defalcation of Virginia and Tennessee does not hurt Vir
ginia and Tennessee one-tenth as much as it hurts New York
and Massachusetts, that faithfully pay every penny they owe.
It is true that the world, in such cases, ought to discriminate
sharply between the guilty and the innocent ; but it is just as
true that it never has done so, and that it probably never will.

Second. The national honor. Here, again, the world ought
to draw the line impartially between those commonwealths that
pay what they owe and those that do not ; but it is folly to sup
pose that it will ever take that trouble. The twelve States that
are in default number nearly one-third of those composing the
Union, and supply one-fourth of the population of the country,
and when so many members of our national family forfeit their
good names, the rest of the household must suffer from the rela
tionship. The mere fact of non-payment by an indebted com
munity is not all, nor the worst j it is not half so damaging to
the public credit as the methods that have been resorted to in
the course of repudiation. The various successive steps taken
by Virginia to cut down and get rid of her debt, make a record
far more disreputable than a simple refusal to pay would have
been. The latest expedient to which she has resorted is the



RESPONSIBILITY FOE STATE ROGUERY. 569

most disgraceful of all. That has been the monthly expendi
ture, by direction of her Legislature, of a large amount of
money to buy in her outstanding compromised obligations.
First she scales down her debt nearly half, and then, when she
has so blackened her credit that the new paper is worth only
about fifty cents on the dollar, she buys it in at the current dis
count, using for the purpose money the ability to raise which
shows that she does not default through poverty that ought
to go to the interest of her bonds.

What the national credit has suffered in the past, and is now
suffering from repudiation methods, may be expected to con
tinue as long as there is a dishonored State debt. There will be
a continuous struggle between the wronged creditors and the
defaulting commonwealths, the one trying to secure and the
other to defeat a settlement, and each entirely too ready to
appeal to sharp and demoralizing expedients, including over
tures, more or less direct, to the cupidity of legislatures and
courts. In fact, as long as there is a defaulted State bond in
circulation, it is liable to be an instrument of speculation, liti
gation, corruption, and scandal.

Third. The public morals. It is not to be supposed that the
States can, year after year, pursue a course of dishonesty to
ward their creditors without their examples telling upon the
conduct of their subordinate communities and their individual
subjects. Most appropriately does Justice Field say, in a dis
senting opinion in one of the cases in which our Supreme Court
has upheld repudiating legislation :

" If the Government will not keep its faith, little better can be expected
from the citizen. If contracts are not observed, no property will, in the
end, be respected ; and all history shows that rights of persons are unsafe
when property is insecure. Protection to one goes with protection to the
other, and there can be neither prosperity nor progress where this foundation
of all just government is unsettled."

The severest reproach to-day attaching to Americans as a
people is their indifference to public obligations. Fifty years ago,
such a thing as a city or a county or a township issuing and
negotiating its bonds without faithfully providing for their pay
ment, would not have been thought of; but now, judging from
the number of such communities that, on the slightest of pre
texts, or no pretext at all, have repudiated their paper, it is to be



570 THE NORTH AMEEICAN EEVIEW.

inferred that, outside of leading commercial centers where
public credit is a necessity to business, very few of our bonded
municipalities would pay a dollar of their debts if the interfer
ence of the courts could be escaped.

Nothing is more notorious than that citizens who would
scorn to be suspected of a disposition to shirk their private en
gagements, will publicly and unblushingly favor repudiation on
the part of the State, or city, or county in which they live. In
that regard, they seem to recognize no moral or honorary obli
gation as attaching to them personally. Indeed, that is a propo
sition publicly proclaimed and maintained. Not long ago there
was a convention in the State of Missouri, made up of delegates
from the different local communities seeking to defeat the col
lection of their bonds, that issued a printed address, in which
we find the following curious bit of casuistry :

"Many labored efforts have been made, to show that there are questions
of good faith and moral obligation in reference to the payment of these
bonds, wholly independent of the question of their legality. We maintain
that arguments based on such considerations have no application to the pay
ment of municipal obligations, and never had. . . . The only questions to be
asked and answered in reference to a bond of that character are, Has it been
issued by proper authority of law ? Is the taxable property of the locality
sufficient to meet the obligation, if its payment has to be enforced by law ?
These are the true foundations of public credit as applied to municipal cor
porations, and they are matters of law purely."

According to the ethics of that address, a community has a
perfect right to issue and market bonds, and then throw them
off, if it can. And in so doing, its citizen incurs no responsibility.



Online LibraryNathaniel Hillyer. EglestonThe North American review (Volume 139) → online text (page 55 of 60)