Fifty years in Wall Street
large interest there and I protest against the proposition to
list these Georgia bonds for regular dealings at the Exchange,
as the State of Georgia is not only in default in payment of her
bonds, both principal and interest, and long since past due, but
besides has repudiated eight millions of her bonded debt which
were issued for value received under the great seal of the
commonwealth, properly signed, legally issued and in the hands
of innocent parties who have acquired vested rights therein,
and, therefore, are the victims of a gigantic robbery by the
repudiation of said bonds. It is but fair to assume that a State
which undertakes to blot out by a legislative act, without being
willing to submit any questions at issue to the judiciary—who
alone have the right to decide upon such questions—find _that_
to be so simple a method of paying debts will not unlikely be
tempted to repeat repudiation often in the future. These bonds
now attempted to be foisted on the public cannot, by any
possibility, be expected to have any greater permanency of value
than those that have already received the shameful fate of being
reduced by repudiation to the value of brown paper. I foresee,
therefore, that if the N. Y. Stock Exchange lists this new issue
of bonds, that by fictitious methods quotations may be obtained,
and in all probability the members of the N. Y. Stock Exchange
be induced to deal in them and suffer the cruel loss that has
already been my fate. The State of Georgia, with interest to
date, owes me and my old firm at least five million dollars;
therefore, I have a right, owing to my large interests in the
Stock Exchange, to urge that the application to list these new
Georgia bonds be denied, for I fear that should it be otherwise,
many of the members whose seats are in part security for
transactions, may be tempted to deal in these so-called
“securities” and suffer great loss if not ruin thereby, for when
the time of repudiation takes place the security in their seats
at the Exchange may be made valueless through said loss to
honest creditors. When the State of Georgia wipes out the
disgraceful blot of repudiation which now stains the escutcheon
of the commonwealth, she will then be entitled to have the
facility which the New York Stock Exchange has the power of
granting, to aid her in restoring her credit to rank alongside
others. She will then be entitled to credit on a 3 per cent.
basis similar to the States of New York, Massachusetts, Maryland
and many others, _but not before_.
Respectfully yours,
HENRY CLEWS.
* * * * *
SHALL REPUDIATION BE RECOGNIZED
NEW YORK, June 25, 1886.
_To the Governing Committee of the N. Y. Stock Exchange_:
DEAR SIR:—I send you an exact copy, published in the _Graphic_
newspaper under date of June 15th, 1886, of a bond issued by the
State of Georgia, which you will perceive is an out-and-out
State bond and represents an issue of 1,800 bonds of $1,000
each. The act of authorization of the State was passed upon by
the eminent legal firm of Evarts, Southmayd & Choate, also by
the late Judge Emott as being in conformity with law and in
every respect a regular and legally issued bond of that State.
The innocent holders of these bonds are the following:
The Broadway National $200,000
Bank
The Metropolitan Savings 100,000
Bank
The Brooklyn Trust Co 100,000
Russell Sage 200,000
Henry Clews & Co 486,000
The Union Trust Co 100,000
Ezra A. Boody 200,000
Richard Irvin & Co 133,000
The Commercial Warehouse 200,000
Co. about
The balance is in small lots scattered in numerous hands. None
of these bonds was disposed of for less than 90 cents in money.
The Broadway Bank loaned $160,000 upon theirs, taking them as
collateral. Some other institutions held them as collateral
against advances similar to that of the Broadway Bank. The whole
of this issue was repudiated by the State.
The State of Georgia also notified the Exchange that a large
number of bonds known as Quarterly Gold Georgia Bonds were also
repudiated. The numbers of these bonds were scattered in amongst
an issue of two and one-half millions of that class of bonds,
all of which were long previously admitted to dealings at the N.
Y. Stock Exchange. The N. Y. Stock Exchange having received
notice from the State that they had been repudiated, ordered
them stricken from the list. These bonds are all in the hands of
innocent, _bona fide_ holders, who paid in the neighborhood of
par for them in all instances and the avails therefor were
received by the State.
Those not repudiated of these issues have since and are now
daily quoted at the N. Y. Stock Exchange, the price being at the
present time nominally about 112.
I have only noted a part of the bonds repudiated by the State of
Georgia, so that you may be convinced of the fact that the bonds
are out-and-out State bonds and just as good an obligation
issued under the great seal of the commonwealth of Georgia and
as absolutely binding upon the State as the new bonds which are
now attempted to be listed; and should the latter be listed, the
chances are that they will share the same fate as those noted.
If a State can issue such obligations, and wipe them out by an
act of repudiation with impunity, and the Stock Exchange ignore
such shameful conduct, there will then be no safety in buying
bonds issued by any State, as it is thereby made to appear that
there is no stain left upon her escutcheon, the evidence of
which is that the N. Y. Stock Exchange has backed them up in
their action. Under the Constitution which gives sovereign
rights to States a citizen holding these repudiated obligations
cannot sue a State, therefore there is no redress for a great
wrong done.
I shall be glad to appear before your Committee and give you all
the evidence in the case before you decide upon the application
now before you to admit $3,300,000 Georgia 4½ per cent. bonds.
Very respectfully yours,
HENRY CLEWS.
* * * * *
A REMINDER TO SENATOR EVARTS.
In connection with this Georgia bond affair, even at the expense of
stringing the subject out to a considerable length, I cannot omit the
following communication to Senator Evarts on the subject:
NEW YORK, April 13, 1886.
_Hon. William M. Evarts, Washington, D. C._:
DEAR SIR—It is quite generally understood, from information
lately received here from Washington, that there is soon to be
sprung upon Congress a bill providing for large appropriations
for the improvement of rivers and harbors and other so-called
public improvements in the South. There is a feeling of strong
opposition in financial circles in this city against the justice
of the General Government making such appropriations to many of
the Southern States at the present time. This opposition is
based upon the fact that the State of New York contributes by
taxation about one-fifth of all the revenue raised in this
country which provides for the expenses incurred in carrying on
the Government, so that whatever moneys are spent for the
so-called public improvements, at least one-fifth of the amount
is extracted from the pockets of the citizens of this State,
through taxation; and as many of our citizens have been so
villainously victimized by the repudiation of the Southern
States, especially by the State of Georgia, it is but just and
fair to these victims, therefore, that no appropriations of
money for the purposes named should pass Congress for the
benefit of any State which is at present under repudiation. It
is eminently proper that Congress should take a stand against
this, as the very people who have been so robbed are to pay the
cost. A large number of them have been ruined, as a penalty for
believing in the honor and good faith of Southern States, and
while such claims remain unpaid, it certainly does appear harsh
that these citizens should be taxed by the General Government
and compelled to contribute to funds to be appropriated for the
benefit of States now in default of both principal and interest
for bonds issued by them under proper legislative authority and
bearing the great seal of the commonwealth. The money paid for
these bonds by confiding people has gone into public
improvements in those States. If the Government desires to make
appropriations, they should be made to the holders of these
bonds, and the share to the various States be in their own bonds
in place of money. The States thereby would take the place of
the present holders. When repudiated bonds are all extinguished
it will be time for the Government to begin the appropriation of
money direct. No greater public improvement for the South, as
well as for the credit of the entire country, would equal the
removal from the various States of the blot of repudiation which
now stains their escutcheons, and reflects most injuriously upon
the credit of the General Government itself.
Yours very respectfully,
HENRY CLEWS.
* * * * *
ANOTHER STRONG PROTEST.
September 2, 1886.
_James D. Smith, President of the Stock Exchange_:
DEAR SIR—I beg to hand you herewith a memorial in relation to
the new issue of Georgia bonds, signed by a number of the
largest and most important firms and corporations in this city,
most of whom are connected by membership with the Stock
Exchange, and all of whom, like myself, are victims of the State
of Georgia’s repudiation.
I understand that the subject of admitting this new issue of
these bonds is to come up for consideration at the next regular
meeting of your committee. Will you do me the favor of
presenting this petition at said meeting? Hoping this matter
will receive your favorable consideration and influence, I have
the honor to remain,
Yours very respectfully,
HENRY CLEWS.
_To the Governing Committee of the New York Stock Exchange_:
We, the undersigned, holders of repudiated bonds of the State of
Georgia, have learned that an application has been made for
listing upon your Exchange new issues of bonds of that State.
We respectfully urge upon you that so long as the name of
Georgia remains dishonored by repudiation, you should stamp upon
such application your absolute disapproval, and thus maintain
the well known and uncompromising hostility which the New York