Fifty years in Wall Street
in a long term bond at a low rate of interest, and on such an
adjustment all parties, at home and abroad, could unite in
maintaining the high financial credit to which the Empire State
of the South would then be entitled.
In December of last year the Atlanta _Constitution_, discussing
this subject, used the following language: “The burden of his
complaint is, that the bonds have never had a hearing in court.
This comes with poor grace from the ex-Governor, who, when the
validity of the bonds issued under his administration was being
discussed by the legislative committee, was absent from this
country, his whereabouts unknown, and his testimony not
procurable. The bonds were ‘in court’ then, and as Governor
Bullock was not present with his evidence when it was needed, he
should not complain that a new hearing is not had for his
benefit.” To this I made reply, which the _Constitution_ kindly
published, and I will thank you to copy as follows: “I desire to
say that I was not absent from the country. My whereabouts were
known, and my testimony was before the committee in the full and
complete report of the financial condition of the State which I
made to my successor, sustained by the official records of the
Executive and State Departments. I never received a request from
that committee to come before them in person, and my presence
would not have added to the information in their possession.
Every request received by me from my successors, to aid in their
investigations, has been promptly complied with. In accordance
with such request I met Dr. Bozeman, financial agent,
Attorney-General Hammond and Governor Smith, in New York, and
also subsequently, Colonel Snead, Attorney for the State, and
Colonel Kibbe, chairman of committee. No fact within my
knowledge has ever been withheld, nor have I ever neglected any
proper opportunity to contradict the statement that any of the
bonds issued during my administration and reported to my
successor were ‘bogus.’ But, Mr. Editor, the question is, shall
a debtor pass on the validity and enforce judgment against his
own indebtedness? I submit that a legislative investigating
committee is not ‘a court’ in the sense that its findings are
conclusive on questions of law. To hold a question so decided to
be _res adjudicata_, is to sustain a legislative usurpation of
the judicial functions of the government. If your position be
well taken, that because the Legislature has decided against the
bonds, the case is _res adjudicata_, and the judiciary is
precluded—of what avail is our constitutional guarantee that the
executive, legislative, and judicial branches of the government
shall be separate and distinct, and that neither shall encroach
upon the functions of the other? What protection has a citizen
for his property if a legislative decision upon a legal question
must be regarded as final _res adjudicata_?
Does not the taking of other people’s money to build up our
railroads, and refusing those people a hearing in courts of our
own creation, before judges of our own election, indicate a want
of confidence in the justice of our cause? The Territory and
State of Minnesota used other people’s money to open up her
lands by the construction of railroads, just as Georgia did,
pledged the faith of the State for repayment, and then
repudiated, just as Georgia did. After twenty years’ delay,
justice has been done, and her obligations, as ascertained
through her court, have been paid. I have faith to believe that
the Empire State of the South will eventually keep pace with her
sister States in the Union in meting out exact justice through
her courts to every man, come from whence he may.
* * * * *
Hon. Wm. A. Post, Deputy Attorney-General of this State, by
appointment, visited this city last Friday to take evidence on
the Georgia repudiated bond question, the object being to
determine the legal status of a new issue of bonds by the State
of Georgia in connection with the savings banks of this State.
Owing to the repudiation of that State, at present these
institutions are debarred from investing in bonds of any
repudiating State, and the effort now is being made by the
representatives of the State of Georgia to remove that barrier,
so that the savings banks can be gutted of their surplus means
and filled up with the bonds issued by that State, which are
more than likely to share the wicked fate of repudiation, as
previous issues to the extent of $8,000,000 have done. The
savings banks managers, even in the event of obtaining a
decision authorizing them to take Georgia bonds for investment,
should be held personally liable for any losses that may fall
upon such institutions if they hereafter invest the funds of
widows and orphans in a security which, judging from past
experience, is almost sure to be wiped out and made worthless.
Mr. Clews charged that Mr. Calhoun’s appearance in representing
the State before the Attorney-General at Albany was a
surreptitious proceeding, and was only heard of by mere chance
by the holders of the repudiated bonds through a squib in a
Georgia paper. He also stated that the bondholders had patiently
waited twelve years for their money, and no body of creditors
had ever been so lenient as those of the State of Georgia, and
justice demanded that these long-suffering and much-defamed
creditors should be settled with prior to the financial world
according to the State of Georgia a sufficiently high credit to
admit of her floating any new issues of bonds. A motion was made
to adjourn the meeting until the 20th, which Mr. Post said he
would accede to after asking ex-Governor Bullock a few questions
in relation to the connection of the firm of Henry Clews & Co.
and the State of Georgia during the time he was its Governor. He
desired to make these inquiries now, as the ex-Governor was
present and might not be at the adjourned meeting. Mr. Clews
requested permission to state that his firm—Henry Clews &
Co.—had never been agents for the State of Georgia, but merely
acted for her as bankers and brokers. The agent of the State
during the entire period of Governor Bullock’s term of office
was the Fourth National Bank of this city. He stated that his
firm received no bonds, excepting by purchase or as collateral,
and advanced money to the State as it was needed. At one time
the State owed for said advances as much as $1,650,000; the
money so advanced was stated by Georgia’s officials as required
to meet the expenses of the government of the State. Ex-Governor
Bullock fully ratified Mr. Clews’ statement. He admitted that
the Fourth National Bank was the State financial agent, and that
he had placed a large quantity of bonds with Henry Clews & Co.
to market and as collateral for advances. “I will say,” said the
Governor, “that every dollar secured on the sale or pledge of
these bonds was received by the State, and it was expressly
agreed that the firm of Henry Clews & Co. should hold all the
bonds in their hands as security for the indebtedness due them
by the State of Georgia.”
* * * * *
GEORGIA’S OUTLAWED BONDS.
Newspapers in Atlanta, Savannah and other parts of Georgia have
violently assailed _The Graphic_ for its comments on the new
issue of Georgia State Bonds as affected by the repudiation of a
former issue. These journals are short-sighted, as are the
people of Georgia who imagine that they save money by outlawing
the obligations of their State issued in the usual manner. We
will not impute deliberate dishonesty to them, but they
certainly do not place their own motives in a favorable light
when they exclude the holders of the repudiated bonds from even
the right to present their claims before the civil courts of
Georgia. Ex-Governor Bullock has been berated in the same
connection, and he cogently replies:
“I have no pecuniary interest in the repudiated bonds or
obligations. I have no lot or part in any scheme or combination
by or through which public attention is or has been called to
this matter. My attitude is that of a private citizen who has as
high a regard for the honor and good name of Georgia as any man
within her borders. I never obtrude “the bond question” upon the
public attention. But when my official action is attacked in
that connection I shall never fail to assert and re-assert that
the financial statement made by me to my successor in office was
the exact truth and that its correctness never has and never
will be successfully controverted. In that financial statement
were many of the State obligations, which in a time of great
public excitement and partisan zeal were ‘outlawed’ by the
action of a political body, and up to this day and hour the
holders of such obligations have been denied that cool,
dispassionate hearing of their claims which our courts alone can
give. My ‘attitude’ is that Georgia is too great, that she
stands too prominent in this country and in the world at large
to accept the position of being a semi-annual defaulter and
refusing to the creditor a hearing in her own courts. It is idle
for me to assert or for you to deny the validity of the
defaulted securities. That is a question of law, and no Georgian
can defend his State while she slams the door of our courts in
the face of our creditors. I assert that it does make a vast
difference to Georgia whether her new securities are listed at
the Exchange in New York. Our own people or other people can, of
course, buy and own them, and I know the interest and principal
will surely be paid, but unless the bonds are ‘listed’ they are
not, in mercantile parlance, a ‘good delivery,’ and will not
stand abroad as they should, equal with the best State in the
Union.”
A State which once repudiates its obligations cannot be trusted
not to do the same thing again. What guarantee can any investor
have that the bonds which Georgia is now trying to put upon the
market may not be outlawed by the next Legislature? The
_Graphic_ has no interest in the matter beyond that of upholding
public morals, the good name of the State and the rights of
swindled creditors. The State which repudiates is as foolish as
the imbecile who cut off his nose to spite his face.—_N. Y.
Graphic_, June 6th, 1885.
* * * * *
The extreme care with which so-called securities or new issues
of bonds are scrutinized in this market nowadays is shown in the
opposition which has sprung up to the proposed listing on the
New York Stock Exchange of $3,500,000 new Georgia State bonds.
While money is a glut in the markets and our banks are now
carrying a larger idle reserve than ever before known in the
history of business, there is no disposition to permit Southern
repudiators to come in and secure any part of the funds. The
application to the Attorney-General to permit our savings banks
to “invest” in the bonds, and the request that they be listed in
the Stock Exchange, aroused New York bankers to action, and