Mississippi Skeleton

In June 1838, the Sovereign State of Mississippi sold $5,000,000 worth of bonds to pay for 50,000 shares in Union Bank of Mississippi. In less than two years the bank was hopelessly insolvent. In 1842 the Mississippi Legislature denied that the State was under legal or moral obligation to pay the bonds in question. Thus occurred the first repudiation of a State debt. Similarly, in 1839 Mississippi defaulted interest on a bond issue sold in 1831-33 to raise funds for another State bank. Although the courts ruled against Mississippi in both cases, in 1875 Mississippi adopted a constitution expressly stating that nothing could be done about either issue.

Long and rancid have been the efforts of a British Corporation of Foreign Bondholders to force Mississippi to pay. Last week for the first time a group of U. S. holders of the defaulted bonds advertised themselves anonymously in Manhattan, prepared for action against Mississippi.

The Mississippi skeleton has accumulated $32,000,000 interest charges upon its $7,000,000 frame. British Corporation of Foreign Bondholders does much to discourage the purchase of bonds from Mississippi and other United States with obligations in default.* And certain States keep such bonds from their legal list. Prime example is Connecticut, whose rigid rules also bar the bonds of Arizona, New Mexico and Oklahoma from the legal list because these States were admitted to the Union after 1896, have not had a sufficiently long history to be given full credit standing.

* Other States with bonds in default: Alabama, $13,000,000; Arkansas, $8,700,000; Florida, $8,000,000; Georgia, $13,500,000; Louisiana, $6,000,000; North Carolina, $13,000,000; South Carolina, $6,000,000. Minnesota once repudiated, reconsidered.

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