American Debts.

Press, Volume LXIII, Issue 19159, 16 November 1927, Page 8

American Debts.

It is a little like the bad old times to be discussing war debts again, but the "right-hand man of the Mayor of " Chicago " has announced, after a visit to Europe, that "those Americans who "clamour for repayment should go to "the battlefields," and that it will be time enough for Europe to pay when her war areas are rebuilt. And in the meantime the Chicago Tribune has started a campaign against the Americans themselves by demanding " recognition and discharge" of the obliga-

tions contracted by the Southern States during the Civil War —a sum computed, with interest, at about £65,000,000, and very largely owing to British bondholders. We have had something to say about this matter before, as at one time or another most British newspapers have, but it has not often been discussed seriously. The Chicago Tribune, however, discusses it very seriously indeed, saying bluntly that " the reputation and credit of the " United States demand the payment to "foreign creditors of these State obli- " gations whether the States themselves "recognise the debt or not," and that Congress should act at once to save the nation's face. The position is certainly an extraordinary one, and not now easily understood or explained. Even the Tribune admits that it will "rei" quire an international Commission, " and a long period of research and "discussion before the true amount of "the debts and the bona fide creditors "can be discovered," for of course loans to the Southern States during the Civil War were expressly repudiated, and it is not easy to distinguish between obligations entered into voluntarily by State Governments and those contracted "under the duress of 'car- " 'pet-bagger' rule." Some of the debts, however, were contracted before the Civil War—the Mississippi bonds have been in default since 1842 —while the "carpet-bagger" debts date from the period immediately following the war, when the old Administrations had

been dissolved, and " carpet-bag " Governors had been sent down by the Federal authority to create new ones. But what especially disturbs the Chicago Tribune —it is certainly an astonishing situation, if it is correctly described — is that the defaulting States take refuge behind an amendment to the Constitution which prohibits private suits against a State except with the State's consent. It is doubtful if there is any other example in modern times of a civilised nation going so far in open and admitted repudiation —if Ave except Russia, which, since the revolution, has [■been an international law to itself. But [ it is better that the Tribune should do the scolding, while Britain, as creditor, looks on; and the Tribune does it. The question, it says, is old, and the facts " befogged by time and tangled in the. " legislative procedures of the States "during periods of economic, social, "and political distress." But the United States cannot afford to seek cover behind the legal distinction between Federal and State obligations. " The Federal Government must assume "responsibility for the 'carpet-bagger' "debts"; but it must also assume responsibility for the other debts " if the " Southern States cannot be persuaded "of their duty to make payment"; and until it does both no American can "feel comfortable in the presence of "an Englishman."