Repudiation,

Repudiation, an unprincipled method for the extinguishment of a debt, by simply refusing to acknowledge the obligation, which has been adopted notoriously by several states of the American Union; Hayti has been the next worst offender. The eleventh amendment of the Constitution of the United States prohibits citizens of another or a foreign state from bringing suits against a state in the federal courts; while the individual states, not being independent sovereigns, could only be called to account by a foreign power through the national government. Reprisals or war are thus as impossible as a suit at law, and there is really no means by which the states can be compelled to recognise and meet their obligations. Twice in the history of the country have several states taken advantage of this condition of affairs—once after the commercial crisis of 1839, in which the United States Bank stopped payment, and again in the years following the civil war. In the latter period Virginia, North and South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, and Arkansas were among the defaulters. Virginia, indeed, refused payment chiefly on the ground that no part of its existing debt had been allocated to West Virginia when the latter was separated as a state in 1863; and later acts of repudiation have found a local justification in the same grievance. But in the other states repudiation is to be traced to the effects of the war and to the unsettled government which ensued. The rebellion had left commerce in these states prostrate and paralysed, and especially was it necessary that railways should be rebuilt and new roads constructed; and to this end the public credit was pledged, often recklessly and at ruinous rates. In most cases the debts created in aid of railways were repudiated on the ground that the money had been obtained collusively and with no proper return of benefit to the states: North Carolina thus wiped off an obligation of more than $12,000,000. The other states mostly based their action on decisions of their own courts or on the action of their own legislatures; but such decisions are to be regarded as ultra vires, and in their action the states were not justified by law at all, but were simply taking advantage of the fact that they could not be compelled to pay.