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Page 22
The bonds issued by the State of Mississippi to the Planters' Bank were
based upon a law of the State, and affirmed, by name, in a specific
provision of the State Constitution of 1832. The State, through its
agent, received the money, and loaned it to the citizens of the State,
and the validity of these obligations is conceded by Mr. Slidell and Mr.
Davis.
These bonds were for $2,000,000, bearing an interest of six per cent.
per annum, and were sold at a premium of 13-1/2 per cent For those
bonds, besides the premium, the State received $2,000,000 of stock of
the Planters' Bank, upon which, up to 1838, the State realized ten per
cent. dividends, being $200,000 per annum. In January, 1841, the
Legislature of Mississippi _unanimously_ adopted resolutions affirming
the validity of these bonds, and the duty of the State to pay them.
(Sen. Jour. 314.)
In his message to the Legislature of 1843, Governor Tucker says:
'On the 1st of January, 1838, the State held stock in the Planters'
Bank for $2,000,000, which stock had, prior to that time, yielded
to the State a dividend of $200,000 per annum. I found also the
first instalment of the bonds issued on account of the Planters'
Bank, $125,000, due and unpaid, as well as the interest for several
years on said bonds.' (Sen. Jour. 25.)
The Planters' Bank (as well as the State), by the express terms of the
law, was bound for the principal and interest of these bonds. Now, in
1839, Mississippi passed an act (Acts, ch. 42), 'to transfer the stock
now held by the State in the Planters' Bank, and invest the same in
stock of the Mississippi Railroad Company.' By the first section of this
act, the Governor was directed to subscribe for $2,000,000 of stock in
the railroad company for the State, and to pay for it by transferring to
the company the Planters' Bank stock, which had been secured to the
State by the sale of the Planters' Bank bonds. The 10th section released
the Planters' Bank from the obligation to provide for the payment of
these bonds or interest. Some enlightened members, including Judge
Gholson, afterward of the Federal Court, protested against this act as
unconstitutional, by impairing the obligation of contracts, and as a
fraud on the bondholders.
They say in this protest:
'The money which paid for the stock proposed to be transferred from
the Planters' Bank to the Mississippi Railroad Company, was, under
the provisions of the charter, obtained by loans on the part of the
State, for the payment of which the stock, in addition to the faith
of the Government, was pledged to the holders of the bonds of the
State. By the terms of the contract between the commissioners on
the part of the State and the purchasers of the bonds, the interest
on the loans is required to be paid semiannually out of the
semiannual dividends _accruing upon the said stock_; and the
surplus of such dividends, after paying the said interest, is to be
converted into a _sinking fund_ for the payment and liquidation of
said loans. The bill, as the title purports, simply provides for
the transfer of the stock now held by the State in the Planters'
Bank, and that the same shall be invested in the stock of the
Mississippi Railroad Company, leading from Natchez to Canton, which
has banking privileges to twice the amount of capital stock paid
in. The transferring of the stock and dividend to another
irresponsible corporation, and the appropriation of the same to the
construction of a road, is a violation of and impairing the
obligation of the contract made and entered into with the
purchasers or holders of the bonds of the State, under a solemn act
of the Legislature. If it should be thought that a people, composed
of so much virtue, honor, and chivalry, as the noble and generous
Mississippians, would disdain, and consequently refrain, from
repealing or violating their plighted faith, it may be answered,
that the faith of the State, solemnly and sacredly pledged by an
act of the Legislature, with all the formality and solemnity of a
constitutional law, is violated by the provisions of this very bill
under consideration. The faith of the State is pledged to the
holders of the bonds, by the original and subsequent acts
incorporating the Planters' Bank, as solemnly as national or
legislative pledges can be made, that the stock and dividends
accruing thereon shall be faithfully appropriated to the redemption
and payment of said loans and all interest thereon, as they
respectively become due; the appropriation of this fund to an other
purpose is, therefore, a violation of the faith of the State.'
(House Jour. 443.)
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