Nathaniel Hillyer. Egleston.

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If he issues his own bond, he is morally bound for its payment j
but if he joins with a thousand others in issuing a bond, neither
he nor any of the rest assumes any obligation. If a State,
according to that morality, after pocketing the money of the
purchaser, concludes to repudiate its promise to pay, nobody
in particular is responsible for the paper, either in law, conscience,
or honor not even the people by whom the affairs of the State
are regulated, and who are directly chargeable with the non
payment of the debt. Nor is there any reason, according to the
same view of the subject, why the citizen of a dishonest city,
county, or State should not carry his head as high and as bravely
in the face of the world as a citizen of an honest city, county, or
State. Such is the essential principle of repudiation, by what-


ever name it may be known. The effect of such teaching upon
the moral tone of the community cannot be doubted. Nor is its
influence likely to be limited by the boundary -lines of repudiat
ing States and municipalities. If part of the members of the
body politic become diseased, it will be strange if others are not
affected. To this demoralization can, undoubtedly, be at
tributed a large proportion of what is acknowledged to be the
rapidly increasing number of crimes against property, especially
in positions of public and corporate trust. It is a significant
but by no means unaccountable fact, that nearly all the default
ing States have been heavy losers through the faithlessness of
those to whom their public moneys have been intrusted ; among
the recent sufferers being Tennessee, which has been the latest
State to break faith with its creditors, and Arkansas, which has
been the last to put on record its formal resolution to repudiate
its obligations.

Fourth. The national security. Our Government owes its
life to the credit of its bonds. Their marketability alone fur
nished the means for suppressing the great rebellion. We feel
a just pride in the confidence they command j but we should not
forget that, although it has been less than a quarter of a century
since the first of them were issued, and a sense of what we owe
to them is fresh in the public recollection, we have already heard
loud talk about " bloated bondholders, 77 and witnessed a most
determined movement to depreciate the national securities, in the
proposition to pay them in cheap and irredeemable paper, which
is nothing less than partial repudiation. Let the spirit that
makes war on the obligations of States and their subordinate
communities remain unchecked and unrebuked, and no man can
tell how soon, and with what result, it may attack the bonded
pledges of the nation. They are no more sacred than those of
the States. It is true that the Government may be so firmly es
tablished on the basis of a reconstructed Union that its life would
not be endangered by the loss of its credit, and it would have no
further occasion for the issue and sale of bonds j but is it wise
for it to tear away the supports of the bridge that has so recently
carried it safely over a fatal chasm u ?

But are the holders of State bonds in a position to ask
the intervention of any one in their behalf? Did they not
know of the difficulties in the way of the collection of the
bonds when they purchased them, and therefore take them


at their peril ? A New York journal, criticising the writer's
former article, thus sets forth the argument:

" If there is any class of commodities to which the axiom caveat emptor
was plainly applicable, it was that species of "bonds whose payment is guar
anteed by a State as distinguished from the general Government. ... A
glance at our national Constitution, which is neither an inaccessible nor a
mysterious document, would disclose to any lawyer the non-existence of any
form of process or proceeding by which a State can be compelled to satisfy
its creditors."

The fact is, however, that the true meaning of that accessible
and non-mysterious document, on the point referred to namely,
the existence or non-existence of a legal means of compelling
States to pay their debts is something over which the lawyers
have for many years been about equally divided. While it was
admitted that, under the Eleventh Amendment to the Constitu
tion, the individual creditor could not sue the State, it was con
tended that, as one State could sue another, a State not only had
the power, but it was its duty, to take assignments of its citizens 7
claims against other States in default, and as a trustee collect
them in its name. That proposition was supported with great
plausibility by Benjamin R. Curtis, so long a distinguished Jus
tice of the United States Supreme Court, in a paper to be found
in his collected works, and first appearing in the January num
ber of the NORTH AMERICAN REVIEW for 1844, long before most of
the dishonored bonds were issued. The same view of the law
was taken by Reverdy Johnson, and some years ago a very able
paper in its advocacy, under the caption, " Can States be com
pelled to pay their debts ? " from the pen of Gen. Bradley John
son, appeared in the " American Law Review." So clear did the
right appear to be, that the States of New York and New Hamp
shire, whose legislatures contained some gentlemen of very re
spectable legal acquirements, passed acts authorizing suits to be
brought in their names against defaulting States, on such bonds
as might be transferred to them by their citizens. The recent ad
verse ruling of our Supreme Court was not made until long after
all the bonds had been issued and marketed. It is, therefore, evi
dent that when the purchasers took the securities, it was with no
knowledge or warning that the courts of the country would be
locked against them in case the debtor States made default;
although, of course, when they bought paper carrying the great
seals and indorsements of American States, it was with no expecta-


tion that they would ever have to go to court, and proceed against
its makers as they would against hair-brained speculators that
had oversold their credit, or dishonest jobbers in the credulity
of the investing public. They assumed and did they not have
a right to assume ? undoubtedly, in most cases without con
sulting their lawyers, or engaging in the study of constitutional
lore, that our great and prosperous commonwealths could be
trusted to repay borrowed money without compulsion.

But would it be right or proper to make the people of one
State and it a State that sustains its credit pay, or help to
pay, the debt of another State, particularly if the latter is per
fectly able to pay its own debt ? Or, as one newspaper reviewer
puts it, make the innocent pay for the guilty *? Hardly the cor
rect thing, the writer admits ; but at the same time there may
be cases in which it would be to the interest of the innocent to
pay for the guilty, and wise to do so. How.ever, in this
instance, that is not what the writer has suggested or contends
for. He does not propose to elaborate a scheme of settlement,
which is something that any competent legislator could do j but,
to meet the appearance of inequality and inequity referred to,
he would remark that it could be easily removed by an arrange
ment for the assumption by the general Government of the pres
ent bonded debts of all the States, whether in default or not,
and for adequate compensation to those that owe nothing or but
small amounts. So far as such an arrangement would make a
place for the surplus revenue of the Government, which has be
come a troublesome element, it would work no disadvantage.
In what way could the surplus be better disposed of than in re
deeming the nation's tarnished honor? And while probably
increasing the national bonded debt somewhat, though not
oppressively, it would not necessarily on that account be objec
tionable. It is no secret that the rapid disappearance of the
national securities threatens, by crippling the national banking
system, to become an embarrassment to business, and an increase
of Government paper at this time would be a relief rather than a
public detriment. Indeed, it would be a most excellent thing if
we had fewer local securities, and more of those of the general
Government. An arrangement by which the issue of all State
and municipal bonds would stop, and their places, as far as neces
sary, be taken by obligations of the nation, would be most benefi
cent. And why not have such an arrangement, if there is no


legal impediment ? The abuse of the bond-making prerogative,
by both municipalities and States, has been notorious and pro
digious. The amount of paper put forth has often been exces
sive ; the execution so defective that our law books are filled with
reports of bond cases ; the payment so uncertain as to create a
crying public scandal. The result is, that nearly all such paper
has come to be looked upon with suspicion, and, even if perfectly
good, can only be negotiated at a sacrifice. So offensive has be
come the whole business that several of the States have, by con
stitutional prohibition, cut off altogether the authority to issue
municipal obligations. And yet there are many communities,
especially cities, that cannot well get on and make needful im
provements without the use of their credit, and the coupon bond
is by far the most convenient form of its employment. If, in
stead of the community issuing its own paper, bearing a high
rate of interest, and having to be disposed of at a heavy dis
count, with the possibility, if not probability, of litigation and
discredit following, it could, under a system of taxation that
would guarantee principal and interest, be supplied with an ap
propriate amount of United States Government paper, carrying
a low rate of interest, and negotiable at par or a premium, with
no trouble or scandal to follow, how much better it would be for
all concerned. The money-saving to all parties would be im
mense. And such an arrangement would be less radical and
revolutionary than the change from the old method of local
banks supplying a paper currency to the national banking sys
tem, and in many respects a parallel proceeding. Certain it is
that a State, as long as it cannot be made by law to pay
its debts, should have no privilege of issuing paper of any
kind. Nor would such a limitation be an infringement
upon the just powers of the so-called sovereign States, because
in financial matters the States are not sovereign. They cannot
coin money j they cannot emit bills of credit ; they cannot grant
letters of marque and reprisal ; they cannot do a general banking
business ; all of which are necessary prerogatives of a sovereign.
The only thing they can do that is an act of unmistakable sov
ereignty, is to run head over ears in debt and contemptuously
snap their fingers in the faces of their creditors when pay-day

But the question now is, What is to be done with the repu
diated paper that the States have already issued ? It certainly


does not look as if the States themselves, even if not hopelessly
smitten with what some one has described as " the leprosy of
repudiation," would within any reasonable period take steps for
its settlement, and the nominal prices it commands in the
market show that its owners have no such expectation. Popu
lar sentiment in the delinquent States does not appear to be
running in the direction of good faith to creditors. Such of
their better and more sagacious citizens as have been fighting
the battle for public honor and honesty seem to be losing their
courage or their influence, and the power is more and more
drifting into the hands of that class of demagogues who find in
repudiation an issue on which they can rally the masses of the
people, and especially the more ignorant and impecunious, to
their support. Intelligent taxpayers are rarely repudiators. It
was but a few years ago that Governor Holliday seemed to speak
the public sentiment of Virginia in favor of maintaining the
integrity and good name of that commonwealth, and now its
legislature has before it a proposition notwithstanding all the
adjustments and re-adjustments made with the creditors to
repudiate the State's debt in toto. The immediate predecessors
of Tennessee's present repudiation governor were " debt-payers."
Four years ago, Arkansas defeated at the polls a proposed
amendment to the State Constitution to repudiate most of her
debt; but she has just ratified the same amendment by one
hundred thousand majority. Until the populations of the
defaulting States can be largely renovated by the introduc
tion, through immigration, necessarily a slow process, of
more sagacious and public-spirited elements, it would seem as
if no equitable or satisfactory agreement with their creditors can
be hoped for.

It remains, then, to inquire what the general Government,
which, as already shown, is directly responsible for the existence
of part of the debts, and largely responsible for the treatment
that all of them are receiving, will do in the premises. Two
courses of action are open to it. First, it can try to rescind the
Eleventh Amendment to the Constitution, and give the creditors
of States the redress they originally had ; second, it can pay or
compromise the debts. In executing the first-mentioned course,
the repealing amendment would have to be submitted by a two-
thirds vote of both houses of Congress, and then it would need to
be ratified by the legislatures of three-fourths of the States.


After its adoption, the creditors, who are scattered all over the
civilized world, could bring their actions in the United States
Supreme Court, the slowest tribunal on earth, and, having
obtained judgments there, would then be ready to join issue
with the debtor States in the struggle to enforce execution, the
one side urging and the other resisting the mandatory forces of
the law. By the time that business was settled, it is safe to say
the present generation of creditors, who have already waited
from twenty to forty years for their money, would be dead and
buried. However, as more than one-fourth of the States
twelve out of thirty-eight are repudiators, there would be no
likelihood of the amendment's ratification. As to the other sug
gested course, it must be admitted that our people generally do
not exhibit any great eagerness for its adoption. They seem to
look upon repudiation as our national skeleton, which it is, and
think that the better policy to pursue toward it is to lock it in
the closet as securely as possible, and say nothing about it. The
reticence of some of our public personages and bodies on the
subject is remarkable.

Once a year, for several seasons, the leading bankers of the
country have been accustomed to meet in convention, to con
sider and discuss questions relating to the country's finances.
It might be supposed that the breach of public contracts amount
ing to over three hundred millions of dollars, which, by under
mining the general credit, weakens the security of all obligations,
would be one of the first topics to command the attention of
such an assemblage. But although there has been more than
one endeavor to bring the subject to the bankers' consideration,
nothing concerning it has yet been heard from them.

Our lawyers have a national association, and once a year
the leading lights of the profession have met and concen
trated their radiance upon such subjects in their line as seemed
to need illumination. It would be inferred that the matter
of bond repudiation would peculiarly recommend itself to
gentlemen whose business it is to mend broken contracts.
But although they have talked at their meetings about nearly
everything under the sun, that one subject has not yet come to
their notice.

Every four years our great political parties have had national
conventions, made up of delegates from all parts of the country,
and although these bodies have been accustomed to prepare long


platforms covering nearly everything supposed to concern the
public, they have had nothing to say about State repudiation.
Indeed, they do not appear to have learned that there are re
pudiations and repudiators, since at the latest national con
vention of the party that has claimed to be par excellence the
guardian of the public faith and the national honor, we are told
by the Associated Press reporter that, when the most conspicuous
repudiator in the land appeared upon the floor as a candidate
for participation in its proceedings, he was "received with
tremendous applause lasting for several minutes."

The writer cannot just now recall the place and time where
and when any one of the many regular synods of our religious
denominations, convened of course to advance the cause of that
morality which embraces the Eighth Commandment, has whis
pered, much less thundered, against the sin of organized viola
tion of public contracts, of which our States and smaller com
munities have given so many glaring exhibitions.

The callousness of the people of the repudiating States to the
dishonor and turpitude of their communities, is a painful phe
nomenon, and ominous for their moral and political future ; but
it is not more strange or discouraging than the indifference to
that matter of the people of the other States, who share in the
discredit without receiving any of the supposed benefits. But
perhaps when we see the President, and Cabinet ministers, and
other high officials dealing out the patronage of the Government
in aid of a movement the basis and avowed object of which is
repudiation, in exchange for partisan favors, such things ought
not to surprise us.

The idea with most of our people seems to be that, if nothing
is said about repudiation of public debts, it will get to be an old
story, the public will lose sight of it,' the bondholders will die,
the bonds themselves will be destroyed or lost, and the whole
matter will be forgotten. If there were no remedy for the evil,
probably that would be the better course to adopt ; but when we
have a government with all necessary power in the premises,
with an embarrassing surplus of riches, with the opportunity
presented to deal with the question under the most advantageous
conditions, and undeniably under a high moral if not legal obli
gation to take it in hand and forever put it at rest, it is very
questionable if that would be the wiser policy. Letting the evil
alone is only letting it grow. The defaulted State indebtedness


is now increasing, on interest account, at the rate of eighteen
millions of dollars per annum; and certainly the discredit
attendant upon its non-payment is not diminishing. History
will not forget it, though we, may try to do so. The financial
wounds of our public creditors may be assuaged by the lapse of
years, and all traces of them disappear, but time will not re
move the scar from the nation's honor.

"The deep disgrace, the dark, abhorrent stain
O'er it oblivion's flood will roll in vain."

Formidable as the obligation, at first glance, may appear, and
important as it is to those immediately interested, it is really a
very small affair for such a nation as ours. If paid in full and
immediately, it would be a tax of less than six dollars per
head of our population a light matter to weigh against the
honor of every man, woman, and child in America, and the
value of every debenture we have outstanding or may issue.

It is idle to claim, as has been claimed, that the settlement of
the States 7 liabilities, as proposed, would compel the general Gov
ernment to pay the Confederate debt and many other demands.
For that conclusion there is no earthly reason. The case is one
to be decided on its own circumstances and merits. When the
Government has heretofore assumed debts of the States, as it has
twice done, and distributed surplus revenue and lands among
them, which is the same thing in principle, it has not found
itself compelled to take care of everybody's obligations. In
doing what is now proposed, it would not be making precedent,
it would be following precedent.

Instead of going out of the way to hunt up objections, treat
ing the business as if it were a pound-of -flesh affair, and urging
reasons that are excuses rather than arguments for doing noth
ing, we ought to remember that this is a matter that should not
be decided on narrow and technical grounds ; that the general
Government holds a paternal relation to the indebted States ;
that the honor and character of the whole nation are concerned ;
and that we as a community can much better afford to be liberal
than unjust. That the general Government is blameless in the
matter of State repudiation, will not be claimed by any one.
The extent of its liability is the only question. That liability,
involving a breach of faith with citizens of every civilized
country, and thus carrying a world-wide reproach, is one that no


nation on earth can afford to ignore. That the Government
will, sooner or later, make good the losses of the public credit
ors, can hardly be questioned j but how much better to do so
while those who furnished the money are alive and can enjoy
the benefits. Non-action, at all events, will not answer. To do
nothing while a great public injustice is conceded to exist, and
we as a people have full power so to shape laws and constitutions
as to make it right, will be to acknowledge ourselves a nation of
rascals. Bather than rest under a charge so serious, it would
be preferable for us, in every conceivable sense, to pay the in
volved demands to the last penny, and thus acquit ourselves of
every obligation, win the world's esteem by a magnanimous deed,
and give our troublesome national skeleton an honorable burial.



MR. JOHN STUART MILL has this remarkable passage in his
autobiography :

" was a man of very quick and strong sensibilities ; but, like most

Englishmen who have feelings, he found his feelings very much in his way,
. . . and, looking for happiness elsewhere than in them, he wished that
his feelings should be deadened rather than quickened. And, in truth, the
English character and English circumstances make it so seldom possible to
derive happiness from the exercise of the sympathies, that it is not wonderful
if they count for little in an Englishman's scheme of happiness. In most
other countries the paramount importance of the sympathies as a constituent
of individual happiness is an axiom, taken for granted, rather than needing
any formal statement ; but most English thinkers seem to regard them as
necessary evils, required for keeping men's actions benevolent and compas
sionate, but not as necessary elements of their happiness."

It is well to see ourselves as we appear to the eyes of foreign
ers, and a foreigner Mr. Mill may be almost said to have been,
so entirely had he been brought up aloof from the great currents
of English tradition, so persistently had his early views and
character been molded in. antagonism to the sentiments of Eng
lish society. We cannot, therefore, expect to learn from him
what is best in the inner life of England j but, as to its defects,
we may gather something from his not too favorable verdict.

It is, no doubt, the tradition of the English gentleman, what
ever feelings he may have, to do his best to conceal them. The
temperament of the Teutonic races, we know, is undemonstra
tive, as compared with the peoples of the South ; and in England
this natural self -repression is increased by the training that our
cultivated men receive in the public schools and by the discipline
of the army and the great public professions. These accustom
men not only to control, but to disguise, all their deepest emo
tions. Indeed, the habitual manner of Englishmen, after they
have passed childhood, confines all show of affection to members



of their own home circle, sometimes bestowing it scantily enough
even upon these. This, perhaps, is the reason why English
men are so little liked by foreigners ; the reason, too, why they
succeed so badly in conciliating conquered races. All expres
sion of sympathy toward strangers they restrain so sternly, that
these believe they have no sympathy to express. Hence, while
they respect the strength and the justice of the English, they

Online LibraryNathaniel Hillyer. EglestonThe North American review (Volume 139) → online text (page 56 of 60)