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 theGraphicnewspaper 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 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 fideholders, 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.
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 goodfaith 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.
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:
To the Governing Committee of the New York Stock Exchange:
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 Stock Exchange has always shown against bad faith and dishonest practice.
August 24, 1886.
RICHARD IRVIN & CO.,MORTON, BLISS & CO.,JAS. B. JOHNSTON,S. W. MILBANK,HENRY CLEWS & CO.,HALLGARTEN & CO.,FULTON BANK OF BROOKLYN, ByJ. A. Nexsen, Cashier,WALTER S. JOHNSTON, Receiver Maine National Bank,MORRIS K. JESUP,JAMES R. JESUP,DREXEL, MORGAN & CO.,FOSTER & THOMSON,NATIONAL BROADWAY BANK, ByF. A. Palmer, Prest.,L. VON HOFFMAN & CO.,RUSSELL SAGE,C. F. TIMPSON & CO.,HERMAN R. LE ROY,SAMUEL RAYNOR & CO.,THE N. Y. WAREHOUSE & SECURITY CO., ByS. C. Knapp, Secretary,COMMERCIAL WAREHOUSE CO.,J. F. Navarro, Prest.
RICHARD IRVIN & CO.,MORTON, BLISS & CO.,JAS. B. JOHNSTON,S. W. MILBANK,HENRY CLEWS & CO.,HALLGARTEN & CO.,FULTON BANK OF BROOKLYN, ByJ. A. Nexsen, Cashier,WALTER S. JOHNSTON, Receiver Maine National Bank,MORRIS K. JESUP,JAMES R. JESUP,DREXEL, MORGAN & CO.,FOSTER & THOMSON,NATIONAL BROADWAY BANK, ByF. A. Palmer, Prest.,L. VON HOFFMAN & CO.,RUSSELL SAGE,C. F. TIMPSON & CO.,HERMAN R. LE ROY,SAMUEL RAYNOR & CO.,THE N. Y. WAREHOUSE & SECURITY CO., ByS. C. Knapp, Secretary,COMMERCIAL WAREHOUSE CO.,J. F. Navarro, Prest.
RICHARD IRVIN & CO.,MORTON, BLISS & CO.,JAS. B. JOHNSTON,S. W. MILBANK,HENRY CLEWS & CO.,HALLGARTEN & CO.,FULTON BANK OF BROOKLYN, ByJ. A. Nexsen, Cashier,WALTER S. JOHNSTON, Receiver Maine National Bank,MORRIS K. JESUP,JAMES R. JESUP,DREXEL, MORGAN & CO.,FOSTER & THOMSON,NATIONAL BROADWAY BANK, ByF. A. Palmer, Prest.,L. VON HOFFMAN & CO.,RUSSELL SAGE,C. F. TIMPSON & CO.,HERMAN R. LE ROY,SAMUEL RAYNOR & CO.,THE N. Y. WAREHOUSE & SECURITY CO., ByS. C. Knapp, Secretary,COMMERCIAL WAREHOUSE CO.,J. F. Navarro, Prest.
RICHARD IRVIN & CO.,
MORTON, BLISS & CO.,
JAS. B. JOHNSTON,
S. W. MILBANK,
HENRY CLEWS & CO.,
HALLGARTEN & CO.,
FULTON BANK OF BROOKLYN, ByJ. A. Nexsen, Cashier,
WALTER S. JOHNSTON, Receiver Maine National Bank,
MORRIS K. JESUP,
JAMES R. JESUP,
DREXEL, MORGAN & CO.,
FOSTER & THOMSON,
NATIONAL BROADWAY BANK, ByF. A. Palmer, Prest.,
L. VON HOFFMAN & CO.,
RUSSELL SAGE,
C. F. TIMPSON & CO.,
HERMAN R. LE ROY,
SAMUEL RAYNOR & CO.,
THE N. Y. WAREHOUSE & SECURITY CO., ByS. C. Knapp, Secretary,
COMMERCIAL WAREHOUSE CO.,J. F. Navarro, Prest.
The petition of these gentlemen was granted, and true to its honorable record, the Governing Committee of the Stock Exchange refused to have anything to do with the bonds of the repudiating State of Georgia.