REPUDIATION. 



355 



The tariff message of Mr. Cleveland and the pas- 

 sage of the Mills bill by the Democratic House fore- 

 shadowed the issues ou which the campaign of 1888 

 was to be fought. The Democratic convention at St. 

 Louis, in June, indorsed that policy and renominated 

 Mr. Cleveland. Subsequently the Republican con- 

 vention met at Chicago and placed itself in pro- 

 uouneed opposition to the Mills bill, and in favor of 

 continuing the present protective features of the tariff. 

 It nominated (Jen. Benjamin Harrison, of Indiana, 

 and Levi P. Morton, of New York, for Presidetit and 

 Vice-President. There were minor questions, but the 

 tariff was the vital issue. The rallying cry of the Re- 

 publicans was " Protection to home industry;" that of 

 the Democrats was "Tariff reform." 



The campaign was one of the most earnest ever 

 known, especially in what were termed the doubtful 

 States New York, Indiana, New Jersey, and Con- 

 necticut. Of these New York was considered the 

 pivotal State, and both parties made extraordinary 

 efforts to secure its electoral vote. Towards the close 

 of the campaign the injudicious conduct of Lord 

 Sackville-West, the British Minister, in giving an in- 

 quirer advice how to vote, gave an international aspect 

 to the contest, and quickly brought about the undiplo- 

 matic minister's dismissal. 



The result of the election was a decided victory for 

 the Republicans, who secured the votes of every 

 Northern State except New Jersey. Gen. Harrison 

 received 233 electoral votes and Pros. Cleveland re- 

 ceived 108 electoral votes. The Republican party 

 not only secured its President for the next four ^ears, 

 but the Congress chosen gives them a majority in the 

 House. The Senate being also Republican, the party 

 will on March 4, 1889, have entire control of the gov- 

 ernment. As the tariff was the issue, the result of 

 the election gives assurance that the Republican policy 

 of protection will be preserved as essential to the 

 maintenance of national independence and prosperity. 



(T. v. c.) 



REPUDIATION. The repudiation by several of 

 the States of the American Union of their public 

 obligations derives interest from the anomalous posi- 

 tion of the States. Possessing both the legal capacity 

 and the commercial credit requisite for the purpose, 

 they are enabled to contract debts and create obliga- 

 tions, and yet are not subject to the means of enforc- 

 ing such engagements usually associated with the 

 capacity of incurring obligations. If their indebted- 

 ness was merely to their own citizens the case would 

 not differ from the ordinary one of such relations 

 between a sovereign and subject, but the obligations 

 issued by the States are usually largely held by the 

 people, of other States and of foreign countries. If 

 these States were independent sovereigns they could 

 be held to accountability upon their obligations by the 

 powers by whose subjects such obligations might be 

 held, but as integral parts of the nation they can only 

 be reached by foreign powers through the national 

 government and that practically precludes resort to 

 either reprisals or war. As it regards obligations due 

 by a State to the citizens of another State, Amend- 

 ment XI. of the Constitution prohibiting individuals 

 from bringing suits against States in the courts of the 

 United States cuts off judicial remedies of that class. 

 The absence of means of enforcement tends to give to 

 tlic value of the obligations issued by the States a 

 speculative rather than an intrinsic quality where the 

 commercial integrity of the State has not been placed 

 beyond question by habitual good faith towards its 

 creditors. The circumstance just mentioned will be 

 found to have an important bearing upon the history 

 of repudiation in the United States. 



The history of repudiation shows two distinct 

 periods when the public obligations of several of the 

 States have been violated. The first of these periods 

 followed the speculative era that preceded 1830, when 

 both public and private credit was stretched to an ex- 



tent that produced with its collapse commercial dis- 

 aster of a widespread character. While individual 

 credits were at that time expanded through a variety 

 of causes of a speculative character, the extension of 

 public credit was mainly due to excesses in the 

 construction of works of internal improvement pro- 

 jected in the interest of commercial development. 

 The second of these periods was at the conclusion of 

 the civil war, when the waste of war and interrupted 

 industry had to be made good by an excessive use of 

 State credits that speedily precipitated a crisis in 

 public credits. The first of the periods to which ref- 

 erence has been made was essentially commercial in 

 the character of its causes, while the second period 

 was distinctly political. 



In 1842 Pennsylvania failed to meet the interest on 

 her funded debt, but finally succeeded in fulfilling her 

 engagements. Unfortunately for her fame Rev. 

 Sydney Smith, who was one of the sufferers for the 

 time, thought proper to trumpet her failure to the 

 world in an essay, which is still published without any 

 notice of the State's subsequent amends. In 1842 

 Maryland also suspended payment upon a debt of 

 $12, 000, (XX), contracted for internal improvement?, 

 but escaped from her situation without repudiation. 

 Mississippi allowed obligations to be dishonored that 

 were created in aid of a banking institution that 

 failed, alleging as the cause of repudiation that the 

 bonds had been negotiated for less than was per- 

 mitted by law. In 1837 part of the proceeds of a 

 Joan made by Michigan was lost through the agent for 

 its negotiation, and that State declined to recognize its 

 obligation beyond the amount that had been realized 

 to the State _ therefrom, giving rise to the serious 

 charge that it was an attempt to hold the innocent 

 purchasers of its bonds responsible for the conduct of 

 the agent of the State. In 1843 Louisiana authorized 

 debts due to a failing bank, that had operated under 

 the patronage of the State, to be paid in depreciated 

 State bonds at par, which, although not strictly an act 

 of repudiation, approached it closely in principle. 



The foregoing instances relate to the first of the 

 periods already mentioned, and are to be regarded as 

 part of a general commercial crisis in which both 

 public and private credits suffered. (See CRISIS, 

 ('. '(i.MMERCiAL.) During the second period the failure 

 of public credits was on the part of most of the States 

 that participated in the rebellion, including Virginia, 

 North Carolina, South Carolina, Georgia, Florida, 

 Alabama, litHUBppi, Louisiana, and Arkansas. The 

 general conditions cut of which the repudiation of 

 their public debts on the part of the States last named 

 arose were the same substantially in all of those 

 States. In these States the means and appliances for 

 carrying on government and commerce were reduced 

 almost to worthlessness. Public buildings were de- 

 stroyed or out of repair, the railroads were worn out, 

 their bridges largely gone, and were crippled for want 

 of rolling stock. It was an urgent necessity that the 

 industry of the States should be revived, and for that 

 purpose that commercial intercourse should be re- 

 established, and therefore that the existing railroads 

 should be refitted and new roads constructed, and 

 without aid from the public credit that restoration of 

 production must wait an indefinite time. Until State 

 governments were established that promised some 

 permanency the work could not be entered upon. 

 When these governments were put in operation they 

 were conducted by persons unskilled in public finance 

 or in public business of any kind, who did not repre- 

 sent what was left to the States of wealth and com- 

 mercial credit, and were antagonized by the influence 

 that up to that time had carried on the operations of 

 those States and maintained their credit. 



To accomplish what was actually needed by taxation 

 in the then existing state of affairs was an impossi- 

 bility, and the only recourse was to the credit of the 

 States. It was inevitable that bonds of governments 



