REPUDIATED BONDS

Southland Times, Issue 20524, 28 June 1928, Page 8

REPUDIATED BONDS

THE SOUTHERN STATES. HOW DEBTS WERE INCURRED. New York, April 18. A suggestion that the United States Government take action against Southern States/ which repudiated their bonds, entailing large losses to British and other foreign bondholders, is made in the annual report of the Council of Foreign Bondholders, an organization caring for the interests of British holders of securities of other countries.

The report gives an extensive exposition of the history of the repudiation of debts by the State of Mississippi, which, it is said, was perhaps the most flagrant case of repudiation of public debts among the Southern States of the Union.

The total capital of bonds Mississippi repudiated is given at £1,400,000, and it is declared that the interest in arrears totals £6,400,000 or one-fifth the annual interest Great Britain pays the United States on the war debt. “The case is the worst of the Southern State defaults,” says the London Times. The debts had nothing to do with the Civil War, or of the Carpetbag Governments that were alleged to have followed it. They were incurred more than twenty years before, for the purpose of providing banking facilities and assisting the commercial and industrial development of the State. The loans- were contrasted between 1831 and 1836, and it was not until 1841, when default began, that their legality was questioned. The validity of the issue was upheld in the Courts. One of the most amazing of the elements of the default was that it was considered apt to take a plebiscite whether the bonds should be honoured or not, in spite of the obvious absurdity of adopting such methods in settling a question of honour. A negative answer was only obtained by a small margin.” There is no indication at Washington that the cause of the bondholders will be officially taken up by the Government.