Page:A History of Banking in the United States.djvu/403

 advanced the same, and has presented an account against the State for $124,222.22, and demanded payment thereof in specie. The first installment of the Planters' Bank bonds, amounting to the sum of $125,000, will be due next July. No provision has been made for its payment. One of the circuit Judges has decided that recoveries cannot be had on the notes belonging to the sinking fund. The fund is especially appropriated to the payment of the two first installments of the Planters' Bank bonds. The Mississippi Union Bank, hereafter, will be totally unable to pay the interest on the five millions of State bonds issued in the year 1838.

The state of things at this point of time was this: The Planters' Bank bonds had been sold originally at a premium amounting to $200,000, which sum had been invested as a sinking fund for the same bonds. The bank won ten per cent. per annum during the years of prosperity. This success of the enterprise was the cause of the extravagant degree to which the State committed itself to banking in 1836 and 1837. Then the State ordered the bank to transfer this capital to the Mississippi Railroad Company. The latter never, apparently, used its railroad enterprise for anything else than to get this capital. The bank paid over the capital by scrip which became worthless, but which had nothing to do with the bonds. The Railroad Company had become responsible, as was supposed, for the bonds, just as the bank had been responsible before. It, however, had served its purpose and was defunct. As to the Union Bank bonds, the Governor speaks of three lots of them, two of five millions and one of five and a-half millions, although, under the amended charter, by which the State took five millions of stock, it would appear that there should never have been but ten millions of bonds. The first five millions had been negotiated. He had executed and delivered the second five millions. He reported with pride that, by his proclamation of March 2, 1840, he had made it impossible to negotiate them; likewise that he had refused to execute and deliver the third lot of five millions and a-half.

In answer to the Governor's recommendation of repudiation, the Legislature resolved that the State was bound for both the Planters and Union Bank bonds, and that the insinuation that she would repudiate them was "a calumny upon the justice, honor, and dignity of the State."

Some of the Union Bank bonds were deposited as collateral for the debentures of the Bank of the United States. The interest was defaulted, May 1, 1841, whereupon Hope & Co., of Amsterdam, wrote a letter of remonstrance and inquiry to Governor McNutt. In his reply the Governor complained that if the Union Bank had to bear the loss by the credit sale and the change of currency, her means would be reduced and the risk of the State increased. He gave five reasons why the State would not pay. The bonds were sold on credit; they were made payable in pounds sterling at