LINES OF THE DAY

". . . But the past does not exist independently from the present. Indeed, the past is only past because there is a present, just as I can point to something over there only because I am here. But nothing is inherently over there or here. In that sense, the past has no content. The past -- or more accurately, pastness -- is a position. Thus, in no way can we identify the past as past." p. 15

". . . But we may want to keep in mind that deeds and words are not as distinguishable as often we presume. History does not belong only to its narrators, professional or amateur. While some of us debate what history is or was, others take it into their own hands." p. 153

Silencing the Past: Power and the Production of History (1995) by Michel-Rolph Trouillot

Monday, August 12, 2013

Why Europe Would Not Ally With the CSA: Repudiation of Bond Investment Debt

What is impossible to understand is why the five states that flat out repudiated that debt to European investors, the heart of secession and the CS, seemed to have no memory of doing this.  So, until the very bitter end, they still expected that Europe would come in on their side against the Union.  Now European nations were not, and did not, recognize the CSA as a nation for many reasons, but this debt repudiation, which directly did great damage to many banks and families in England and Europe, had not been forgotten. This is what they could expect from a want to be nation like the secessionist states. Yet,  DeBow even, with all his spewing of numbers and facts and stats never ever mentioned this huge Southern scandal of the 1840's, to which Mississippi was central.


There are many articles and books on the Mississippi Repudiation of the 1840's, but for some reason not many Civil War historians bring it up.

The primary reason Mississippi refused to repay her debt was that it would mean a tax; at the time Mississippi was the wealthiest state, but most of the white population were slave owning planters -- an enormous part of the population was made up of slaves, who did not own anything.  Mississippi was not going to tax her own.  Let the feds -- i.e. other tax payers -- pay for her debt or the hell with it.

An entertaining account is here.
In 1840, the state of Mississippi defaulted on interest payments on $2 million of Planters Bank bonds and $5 million of Mississippi Union Bank bonds. About the same time, seven other states and one territory (later granted statehood) defaulted on their debts, as did the Republic of Texas (later annexed as a state).
Most states later reconciled with their creditors; for example, they resumed interest payments and funded interest arrears. Not Mississippi.
Mississippi proceeded to repudiate both issues of bonds, and, further, to undermine the private debts owed to its state-chartered banks.
Back then, nations that defaulted on their international debts put themselves at the risk of invasion. In the sovereign debt-repayment literature, such invasions, and threats to invade, are called gunboat diplomacy.
In an 1843 debate between a probond Mississippi Democrat and an antibond Democrat, the antibond Democrat spoke of British cruisers off the state's shore. At this point, a member of the audience spoke:
Sir, in that event I join my countryman who opposes the payment of the bonds. My sword … sir, the last drop of my blood, shall be spent in resisting the demand. My state, sir, may she be always right, but, right or wrong, the state, sacred, intangible and profane, forever.
In the United States, states are sovereign. They are the final authority when it comes to their debts. So, states seemed immune to invasion for nonpayment, since the US Constitution requires the federal government to defend the states. But, again, in 1843, a Whig and former president, John Quincy Adams, offered a resolution in the US Congress that would deny Mississippi the protection of the federal government if the state was invaded by its creditors.
In the event of such a war, the State involving herself therein will cease thereby to be a State of this Union, and will have no right to aid in her defense from the United States, or any one of them.
A hundred years later some of the European creditors were attempting to collect what was owned them.

2 comments:

Craig said...

I've been wondering what Jefferson Davis was doing during his missing decade. He was a popular fellow on the Chippewa River during his army years following the Black Hawk War, admired for transforming fur trading posts into lumber camps. How did the price of lumber between New Orleans and Vicksburg affect Mississippi's deficit with Europe? Did Davis visit Wisconsin after 1835 when he resigned his commission with the army?

Foxessa said...

According to the research we've been doing, JD didn't have anything to do personally with the bond debt repudiation -- though many did say he was involved.

It wasn't lumber and fur that had anything to do with the bond debt. The money was invested in Clay's "American System" for MS -- as the Erie Canal had put all the states and Europe on fire with its success. But MS didn't build anything and the monies just -- disappeared. Also then came Jackson's destruction of the whole economy due to his destroying the Bank of the United States. All credit dried up, and that's what Mattie V inherited with his inauguration.

He married the love of his life, Sarah Knox Taylor, in 1835. He met her while stationed in Wisconsin and Illinois for seven years after graduating West Point in 1828. They married in 1835; JD resigned his military commission and moved back to MS with her -- and a few months later she died of one of those lethal fevers indigenous in the Pearl River region. He spent quite a long period of years mourning her death, and being ill himself. He seems to have had a breakdown. he pretty much lived by the support of his brother.

There aren't any 'lost years' in his life