Fifty years in Wall Street
loaned $160,000; Morton, Bliss & Co., Morris K. Jesup, Drexel,
Morgan & Co., Ezra A. Boody, George Morgan, son-in-law of J. S.
Morgan, of London; J. Bowman Johnson & Co., Richard Irvin & Co.,
L. Von Hoffman & Co., Russell Sage and many other first-class
parties that I can name are prominent sufferers resulting from
Georgia’s repudiation; besides which, my firm in 1873 held over
$2,500,000 State of Georgia securities, all of which had been
paid for or advanced upon, and my firm’s suspension at that time
was attributable thereto.
The only way to do, in my judgment, is to make the Southern
States which are now under the serious cloud of repudiation,
understand that their credit is impaired and facilities for
obtaining money materially lessened because of it. Then,
realizing _that_ as their position, and finding that they are
shut out of the financial markets of the world owing thereto,
they will soon make a compromise with their lenient creditors,
and remove the blot from their escutcheons. The Federal
Government is comprised of the various States of the Union, and
to-day enjoys as high a credit as any nation in the world. If
the various States comprising the United States are permitted,
however, to repudiate with impunity and screen themselves behind
their sovereign rights so that creditors have no recourse, the
odium will soon fall upon the General Government, and its credit
will finally become tarnished if not crippled in consequence.
The State of Georgia, as can be proven, received full value. The
internal improvements in Georgia bear testimony of this. The
taxable property of the State has been immensely enhanced by
these improvements, and the debt repudiated is a mere bagatelle
as compared with the ability of the State of Georgia to provide
for it. She has become rich in late years, and if the stain of
repudiation should be wiped out, would stand an excellent chance
of becoming a favorite resort for emigration and for the flow of
capital. Emigrants from other countries to this, in locating,
first look to the credit enjoyed by the State their attention is
called to, and if found high, their conclusion is that there is
safety for property, and if so, corresponding safety for life;
but they will not go to a repudiating State, and in this way the
South is held in check in the development of her resources,
owing to the want of new blood. The bondholders of the State of
Georgia have frequently offered to leave all points at issue in
reference to Georgia’s repudiation to the Courts of that State,
to the United States District Judge, or to arbitration, the
parties to be selected by both sides, all of which has been
denied, the reply being the “bonds are repudiated, and we simply
will not take any steps to provide for their recognition or
payment, and what are you going to do about it?” Under the
circumstances, creditors are powerless, of course, to do
anything, as the State cannot be sued. If you desire it, I will
send you a sample bond of some of the issues repudiated, so that
you may see how beautifully the signatures are written, and how
firmly fixed the seal of the Commonwealth is placed upon them,
besides the magnificent steel engraved workmanship of the
Continental Bank Note Company of this city. If there was not a
prospect of the State of Georgia being forced by public opinion
to provide for these bonds at some future time, they would be
worthy to be framed and hung up in our parlors as a complete and
fine work of art.
Judge Lochrane, former Chief-Justice of the State of Georgia,
has wired me that he will appear before you on Wednesday;
Colonel R. A. Crawford, of Georgia, will also do so; Messrs.
Abbott Brothers, of this city, and others will appear before
you.
You will please append this communication as a part of the
testimony, and should you desire more on the subject, call upon
me therefor.
I have the honor to remain,
Your obedient servant,
HENRY CLEWS.
* * * * *
EDWARD BRANDON, ESQ., _Chairman of the Committee on the
Admission of Securities to the N. Y. Stock Exchange_:
DEAR SIR:—It is currently reported that the State of Georgia is
about to apply to your Committee to list a new issue of bonds.
In behalf of myself and others who have suffered most seriously
by that State’s unwarrantable repudiation of bonds, which have
as full a right to an equal standing as representing the credit
of the State of Georgia as possessed by the new bonds to be
issued, and fully realizing that the cruel fate of the former
merely represents what may be that of the latter, I claim the
right, as a member of the New York Stock Exchange, as a sufferer
to the extent of several millions of dollars by the State of
Georgia’s bad faith, to protest against the admission of any new
securities hereafter to be issued by that State until her
repudiated bonds are recognized and provided for.
Yours very truly,
HENRY CLEWS.
Ex-Governor Bullock’s Democratic successor, soon after he was elected to
that position, appointed as Attorney and Agent for the State of Georgia,
one of the State’s ablest lawyers, a gentleman distinguished as having
been a member of the Confederate Congress, to investigate all the
business transactions between Henry Clews & Co. and the State of
Georgia. Under his signature as Attorney and Agent for the State, he
makes the following statement: “I would say, with a great deal of
pleasure, that after a very thorough and complete examination of the
books of account, papers and correspondence of Messrs. Clews & Co., so
far as they relate to transactions of that house with the State of
Georgia during Governor Bullock’s administration, I am satisfied that in
all the dealings of that firm with the State of Georgia, they have acted
with both fairness and liberality, and I am convinced that in all these
matters Mr. Clews did nothing that would not bear the closest scrutiny,
and he did nothing, in my opinion, to affect his character for integrity
and fair dealing. I make this statement with the more pleasure because I
began this examination of accounts of Clews & Co. under impressions very
unfavorable to Mr. Clews.”
* * * * *
The opinion of ex-Governor Brown, now our able senior United States
Senator, was asked by thirty-five members of the Legislature of 1873. In
the course of a comprehensive and exhaustive argument, the distinguished
Senator says: “The State will be driven to abandon this position
(legislative repudiation) and to permit a case to be made by her
creditors to test the validity of these bonds in the courts of the
country, or she must stand dishonored in the estimation of all good men,
and her credit must sink to a ruinous depth.”
* * * * *
The late ex-Governor Alexander H. Stephens, ex-Vice-President of the
Southern Confederacy, is on record as saying, in reference to this
repudiation, that it is “nothing short of public swindling. Not less
infamous than obtaining money under false pretences.” But the partisan
feeling was then so intense that even the lamented ex-Governor Jenkins
was hardly accorded a respectful hearing in the Constitutional
Convention, of which he was president, when he plead against sweeping
repudiation without granting the holders a judicial hearing. Ex-Governor
Jenkins said on that memorable occasion: “Now, sir, I take this ground:
that for the proper examination and investigation oi these claims,
neither the Legislature nor this Convention, nor the people themselves,
are a proper tribunal to decide these matters. They ought to be examined
and determined judicially. It will now, I presume, be admitted that the
five years’ time between legislative and constitutional convention
repudiation was not allowed to pass unnoticed by the parties having
these bond claims against the State. Having waived our sovereignty in
the past to allow the State to be sued in every county in the State on
claims for small-pox expenses, I submit that our sovereignty ought not
to be plead to bar so important an issue as that now under
consideration. The State can, in no event, be put to loss. The whole
State has been largely benefited by the legislation and by the executive
action which was subsequently repudiated. We have been for fifteen years
past collecting annual taxes on fifty millions of enhanced value of our
taxable property; an increase which is directly traceable to the good
effects of the new railroads built under that legislative and executive
authority. Shall we—can we honestly receive these benefits and repudiate
our liabilities?”
* * * * *
An interview with ex-Governor Rufus B. Bullock, of Georgia, May 29th,
1885:
A reporter called upon ex-Governor Bullock at his rooms, Fifth Avenue
Hotel, and obtained the following interview:
Governor Bullock: “Any information in my possession is at your
service. I have published from time to time, over my own
signature, my views on this subject, and I have no objections to
repeating them. I desire to say, however, that I am in no wise a
party to the recent proceedings which have been had before the
Attorney-General of New York. I was in the city on private
business and without any previous knowledge of the proposed
hearing. I attended the hearing out of curiosity, expecting to
hear an argument by ex-Chief Justice Lochrane, and while there
was invited by the Acting Attorney-General to respond to his
inquiries. This I did with the result as reported in your
valuable paper. During my administration in 1868-’69-’70 and
’71, bonds of the State were issued for State purposes, and the
endorsement of the State was placed upon certain railroad bonds
under the authority of law.
During the wild excitement that resulted in and followed the
overthrow of the Republican government in Georgia, nearly all
the acts of Republican administration were repudiated, among
them its financial transactions, and up to this day and hour the
questions of fact have never been permitted to reach any
judicial tribunal.
The people of New York State are fair-minded, law-abiding and
honest, and whenever they can be informed of the truth will
fearlessly follow it; but with regard to the real merits of this
repudiation, no light has reached them because our courts have
been closed.
It is asserted by the holders of these repudiated
obligations—and in this assertion I concur—that every bond was
issued in accordance with law, and that the State is now in the
enjoyment of the benefits resulting therefrom. In the exciting
times to which I have referred, a majority of the then
Legislature decided that the State was not bound by the acts of
its predecessors, and therefore these obligations were null and
void.
This is, of course, a question of law, and not of legislation. I
am sure that now, when partisan passion has subsided, both
parties to this controversy would cheerfully acquiesce in any
decision reached by our Supreme Court, and that the holders of
these defaulted securities would accept whatever is awarded them