WHAT OF YOUR OWN DEBTS UNCLE SAM?

Nelson Evening Mail, Volume LXI, 5 April 1926, Page 7

WHAT OF YOUR OWN DEBTS UNCLE SAM?

ST \'l K GOYKIiNOB'S FEFJJLF KKPLY The Notorious lUpudiatiuti of U'lieii ,«..<:■ Debts to Uritis!: It Ai liie iiiiii' Mr Baldwin visit Oil l he ['.S. \ • ii I hr 1 >11:• iin■.- s ol funding lli:; Kriiish v. .ir debt, il was 101 l by "Uiny ~.,., silil.. Brilis.h I'tlin '- find iiii.-m----i-i rs llial t he time was upporlmie lo , ci, ;ln lum; standing question of tin repudiated «I«• I.; .-■. i>f several ol' the Slates ii ii„. Cnion. In his wisdom. Air Bald ,-.:,,. backed no dniihi hy the British (.'abincl . did mil think lil to hroarh tile subject al all, and the Huge debt was mailed, laying a burden mi the already „ifi'ta M'd Punish lax payer of some, i liij iv million stei ling annually, I'm' a period nf loughh . sixty eyars. No responsible person in Kngland ever thought nf repudiation, such a procedure was quite impossible and very it w hoped that the I'.S.A. would agree in an all round cancellation as suggest ml h\ Britain, although Lhe latter would Ijo a heavy loser hy such an arrangej,:,.nt. lint everyone in Knglaild and no: a few right thinking people in .America considered that the d< faulting Slates should recognise the debts liny had hv special acts repudiated, the amounts plus interesl to be deducted from the British debt to the Federal Government and taken into account during the funding arrangements. This howevi r, was not to he. Novel theless the matter is not being allowed to pass uniiolh ed by thu.se Americans win, wished to see justice done, and last month Raymond Turner, Professor of history. John Hopkins University, publislied a. powerful and ci.:i\ hieing article in Current History, setting forth the facts and calling upon the States concerned to wipe out the blot on their repulaions, by liquidating these debts in the present day of uiu quailed prosperity. In the course nf his article. I'rofes-<-oi Turner writes :~— In the past few years a greal deal has

been said abie.it payment of European [ debts to the United States for money : burrowed during the great war or shortly after Hie armistice. Opinion* have mauding payment ur the propriety ol any repayment in till!. In the United Slates many people regietted that payment v. as ashed ior, deeming tforgivt'r.i.d- •* ilebUs inclined i;: the common: ..-.a.i.«.* j, coi'-lnbutnu U' <■'■■■ America was ■ '.,, U,- in.'iK?, -i.cJ oil? eiio o .o'.d.d wd 'i.-.Z'. (.■•:.-■ ,'.'"; .'.' -CI ■. '.•.•'•>"' . r ed cm condition of repayment, which Notwithstanding all arguments. for some lime no debti r nf importance, c.v eenting Greal Britain showed any disposition In pay. So, during 1923 and 192. r > righteous anger v,a» often expressed in the United Slates, and many In hew.l thai pressure oughl to he tip plied. With respect to frame, Senator I'.orah. Chairman of the Senate Committee on Foreign Relations. wrote: ■This mailer of the loan was a plain, honourable' engagement. and I hat, kind of engagi mem was quite as sacred as the engaeonienl of a formal treaty." And he added that the idea of non-payment wuh a "doctrine ot shame and violence, repudiation and confiscation, thft creed of Communists. . . [-'veil the imputation ought not tn have a basis." In 1925 the Corporation of Foreign P.undholders, which has headquarters in London, issued its 51st annual report. This report, like many others previously published', gave account of debts due to British creditors by various defaulting countries, the list including Honduras, Mexico. Portugal. Russia. 'Turkey, and seme of lhe States of the United Stales: "The Council regret to icport that wjiilft the Government of the United States has. during the past year, devoted much attention to the 'payment of obligations incurred by its allies during the great war, no steps have been taken hy lhe defaulting States of lhe Union lo recognise and pay their debts." it is not now generally remembered by the American people that, various of the Slates have had evil reputation with creditors, and that some of them, having repudiated deb's, have not to this day seen lit lo pay what they owe. During lhe troubled recoilstriletion period certain Southern Stales assumed dehts which they later repudiated on the ground thai the loans wen- improperly or illegally taken .at a time when the people's uue representatives were suppressed, and when the States were being governed by strangers and scoundrels. Other debts were incurred in. Northern and Soul hern tSates much earlier, for internal improvements, and wen- afterward repudiated when the schemes undertaken had failed. In course of lime the Northern States satisfied their creditors by payment i/r agreement and refunding. For the'most part nothing has f.cv heeii done in the South.

During the veatv 1866-9 the Stale of Georgia borrowed some 8,000,000 dollars. In 1872 the gentie art of repudiation started and continued until 1877 some G.COO.COO dollars of repudiated when 13,000,000 dollars including sums borrowed before the Civil War. obtained from British investors for railroad construction were declared void. South Carolina is responsible for some 6,000.000 dollars of repudiated bonds of which British investors still hold many, interest and principal unpaid, whilst South Carolina can buast of bonds valued nominally at 12.624,000 dollars issued for its railways and State Penitentiary, which are still held in Britain unpaid .and dishonoured. After the civil war, Alabama borrowed to meet current expensse. The usual juggyiing took place, the outcome, of which was that, from a total debt of 25,000,000 dollars the .sum of 15,000,000 dollars was repudiated. Some of the obligations thus forfeited are still held „in Britain. Louisiana was no! to be outdone. She had contracted a small debt. of 25.000.000 dollars for railways, schools, and the citv of New Orleans. Of this amount 14.000,000 dollars were declared invalid. Arkansas, Florida, Virginia, and .Mississippi till played the same game and substantial portions of their repudiated bends are still held in Great Britain. Professor Turner continues; It is not pleasant for America to recall this subject. All these debts have been owing for half a century, and some of them for more than 80 years. In 1919 one of the creditors' report declared: -'The Council would be gl&d to hear what arguments can possibly be adduced in extenuation of the conduct of Mississippi in repudiating payment of its loans of 1861 and 1833, which were duly authorised by the Slate Legislature and were issued at a high price in England. The State invested the proceeds in the establishment of two banks, and so long as they prospered Mississippi paid the bondholders. But when the banks ceased to be profitable, the Stale not only suspended payment but actually repudiated the debt. * Such a step has not. been taken by so backward a country as ' Honduras. Less has been said about Florida, but more might well now be said. When it was inconvenient or difficult to pay, the Territory, and later on the State, took advantage of such technicalities or quibbles as might be used to repudiaot almost, any bargain. Some of tho bonds have gone'unpaid now for three generations. Meanwhile the State has advanced in prosperity and wealth. At piesent it is. the most rapidly advancing community in the Union. From all over the North and Middle West tour'sts and settlers and investors are Hocking to Florida ; fortunes are being made; gieat cities are springing up like magic. And yet tnroulig it. all the ol "debts go unpaid, and foreign investors whose countries tire bidden lo pay America in full are unable to get any recognition that Florida owes them anything at all. DEBTS NOT OF CIVIL WAR STATUS With respect to the debts contracted later, a misconception often prevails, and is sometimes apparently fostered that the repudiation is for the most part en account' of money loaned hy foreigners during the American Civil War; and that no payment is made hecatise y\\v\i debts were declared null hy lhe (hivernuieiil of lhe United States. No well informed person has expected that I In; Confederate. debts would be paid. In 1916 the report of the Corporation of Foreign Bondholders deal; with this very matter: "The Council are convinced that it, great many people in America are under the impression Ihai lhe repudiated debts of the Southern Slates represent money borrowed hy Ihese Slates during lhe American Civil War. This is quite erroneous; the list of defaulted obligations are given at the end of this report, does not contain any loan issued in lhe course ot lhe war for any purposes connecled therewith." It has been urged I hat lhe debts inl eiirred by lhe Southern Sialss during the leconstrilcl ion were imposed upon llieni by dohonesl ami rascally oppres sors, while these Stales were being held down as a conquered country ; and 'hal since much of the. monev was stolen ur wasted, and brought. lhe Southern people no advantage, lhe States have no obligation to repay. Whatever the rondlicl of the rcci.'ll-

si met ion i'(li« iiil.s who took charge of d K . money borrowed by tlir Southern Slate. 1 -. the IwiliS IVl'l'O made iii liir Uovernmeiits legalh constituted for l|„. .timi' being ■ 'i'he aprpoved pro-t-filurt' has been tu punish defaulting ~||icials. not repudiate < h>\ ei inncni faith. If. however, tin* Southern people believe it, .1 r.'J bring jl about lli.it the /Vrfterioui people i:> general aacept their ■::>■ dusto:;, th.it the fjtr.-eniir.pnl 0 !' (~',,, U«<:t"d ■- -il--"-s, i) ••'.i.'J.'v' r w.i.s spoiisibh l"i » hal its agents did there, id,.ii nuii'li may ho said For I lie eontonMn n ih.it ilio Federal Government pin uM assume those debts. NO I.'FIMKDY i'illlouoil FEDEF! \l. C'Ol HIS I'on-igiii is wonder why [hero is no recourse for the. collecl ion of I lies i debts . r for hearing of their cause, since the United States is a civilis >d country, with orderly population and a Guvornmeni that effectually functions.-. Why is I here Hot some remedy through eotil'ts in the United States? Because |,v the Kleventh Amendment l<> the Constitution a Stat,' cannot- be sued wit hi tu its own consent by citizens ■'■ another State or by subjects of a forcigu- Stan : because that consent, cm very sel<lo.m be obtained : and it. is only occasionally thiit an action benefiting individuals is brought by one State aaginst another. It is, diflicult for the foreigner _to see justice ill this situation. "'I he United States Government."' said one of the. reports, "have recognised thatii is inctitnbent on them to see thattin- Spanish-American republics do not take advantage of the .Monroe Doctrine in order to avoid payment of their debts: it is surely a strange anomaly that the States of the American Union should be permitted to shield themselves behind the Constitnion of the United States in order to obtain the same inimuuit v."

Many a one in the United States will ponder" over this situation at a time when his Government is insisting that foreign debtors shall pay what iloy owe. all excuses arid,-. though they are staggering under terrible taxation. hard times, and have a greatly lowered standard of living; and when American statesmen are deploring non-pay-ment or dela, yas striking at. the samtity of contract- and the huindat ionc of "that, honesty upon which the relations of men should be founded. An' there not people in the South to laise. this question again and do what should honourably be done'? Or is there not some statesman of integrity and independence at Washington, with eyes raised above the level of what, is merely expedient, for himself, who will lead the wav? Will Senator Borah himself take the. lead?

On receipt of I'rofessor Turner.',-" article the management of Current History sent- copies of same to the Governors of the several States concerned and asked, for their views on the subject We reprint, the reply of the Governor of Georgia without comment, which is quite unnecessary. Georgia.—l have carefully noted the article to which you refer. 'The writer seems to be trying to be fair in his article, although he might, have gone further and been a little more explicit, as the facts show that the debts which were repudiated were not contracted in the interests if the State but- of individuals who were criminals, 1 am sure, that you are interested in the South and will understand my suggestion when I say that the revival of those incidents is not and can not be beneficial in any way, and ] question the wisdom of continually washing our dirty linen. The South is now looking up and there are progressive and constructive incidents enough to engage our nitont ion at present-, Clifford Walker, Governor of Georgia.