LETTER NO. III OF HON. ROBERT J. WALKER.

London, 10 Half Moon Street, Piccadilly,

January 28th, 1864

In two pamphlets, published by me last summer, Mr. Jefferson Davis was clearly convicted of sustaining the repudiation of the Union Bank bonds, and the Planters' Bank bonds of the State of Mississippi. These pamphlets were most extensively circulated throughout the United States, the United Kingdom, and upon the continent of Europe, and several confederate writers have since referred to them; but no attempt ever has been made, either by Mr. Davis himself, or by any of his agents or friends, to refute any one of the facts or deductions contained in those pamphlets. Indeed, the facts were founded upon authentic documents, official papers, and Mr. Davis's own two letters over signature, plainly and unequivocally sustaining the repudiation of Mississippi. It is true, in the case of the Union Bank bonds of Mississippi, that Mr. Davis justified their repudiation on the ground that the bonds of the State were unconstitutional. But the utter fallacy of this position was shown by two unanimous decisions of the highest judicial tribunal of the State of Mississippi, before whom this very question was brought directly for adjudication, affirming the constitutionality and validity of these bonds. When it is recollected, also, that this was the Court designated by the Constitution and laws of Mississippi, as the tribunal to which the ultimate decision of this question was referred, the wretched character of this pretext must be at once perceived. Mr. Davis's two repudiating letters were published by him in the spring and summer of 1849, yet one of these decisions by the highest judicial tribunal of Mississippi, quoted by me, affirming the validity and constitutionality of these very bonds, was made in 1842, and again unanimously reaffirmed in 1853. But still, Mr. Davis adhered to the same position. As to the Planters' Bank bonds, however, the repudiation of which was shown to have been justified by Mr. Davis, there never was even a pretext that they were illegal or unconstitutional. Nor is there any force in the suggestion, that these questions were decided before Mr. Davis came into public life. They were continuous questions, constantly discussed in the press and before legislative and judicial tribunals. And, we have seen, even as late as 1853, four years succeeding Mr. Davis's repudiating letters, the second decision was made by the highest judicial tribunal of Mississippi, reaffirming the validity and constitutionality of these bonds.

But I will now cite another instance of the advocacy of repudiation by Mr. Jefferson Davis, still more flagitious than that of Mississippi. It was that of the State bonds of Arkansas, the validity and constitutionality of which never has been disputed. A brief history of this transaction is as follows: In 1830, James Smithson, an eminent and wealthy citizen of London, in the kingdom of Great Britain, died, bequeathing, by his last will and testament, the whole of his property to the United States of America, in trust, to found at Washington, under the name of 'The Smithsonian Institution,' an establishment 'for the increase of diffusion of knowledge among men.' After some delay, the Congress of the United States, in 1836, passed an act, accepting the trust, and pledging the faith of the Government for the faithful application of the money to the noble purpose designated by the illustrious donor. Under this act, Richard Rush, one of our most distinguished citizens, who had been minister to England and to France, and had held the position of Secretary of State and of the Treasury, at Washington, was sent by the Government to London, to obtain from the Court of Chancery the fund, amounting to over $500,000. It is usual in the proceedings of the English Court of Chancery, when funds, under circumstances like these, are bequeathed to trustees for scientific or charitable purposes, not to part with the money to the trustee, except upon his filing in court absolute security for the faithful fulfilment of the trust. In this case, however, the High Court of Chancery in England, considering that to imply any laches or neglect of a trust so sacred, on the part of the Government of the United States, was an idea not to be entertained, did, by their decree, without any security, hand over all the money to the Government of the United States, to be appropriated to the purpose designated by the donor, receiving only the pledge given by the Congress of the United States, for the faithful appropriation of the money. Now, if there ever was any obligation, that would be considered sacred by the whole civilized world, it was this, and most faithfully has the Government of the United States executed this trust. Nay, it has done much more; it has granted forty acres of ground, belonging to the Government, in the city of Washington, gratuitously, for the erection of the buildings upon them, erected by the Government, are worth largely more than the whole bequest. Not only has the Government done this, but, upon the whole fund received from Mr. Smithson, it has always punctually paid an interest of six per cent. in gold upon the whole sum, and pledged its faith for a similar perpetual payment. It has also largely aided the institution by contributions to its museum, collections, and library, and by the gratuitous services of public officers in its behalf. Such was the bill passed by Congress in 1846, and which has always been most faithfully executed. So that the institution is now established upon a permanent basis, and is fulfilling all the great and noble purposes proposed by the illustrious donor. Now, in 1837, this fund was received by the Government of the United States, and invested by the Secretary of the Treasury, Mr. Woodbury, in the six per cent. bonds of the State of Arkansas at par, to the extent of over half a million of dollars. During the same year Arkansas invested this money in a bank, entitled 'The Real Estate Bank of Arkansas;' and of which the State was the great stockholder. In 1839, this Bank, having loaned out these funds to the citizens of Arkansas, became absolutely and totally insolvent, and has never been able to pay one cent on the dollar to any of its creditors. In 1839, the State of Arkansas failed to pay the interest on its bonds, and from that day to this has never paid one dollar either of interest or principal on any of these most sacred obligations.

On the 4th of March, 1845, I became Secretary of the Treasury of the United States, and having taken the deepest interest in this Smithsonian fund, and in its faithful application to the noble purpose of the donor, and inasmuch as one of my predecessors had invested these funds in these bonds, and the Government had made itself directly responsible for the faithful execution of this trust, I endeavored to reclaim, as far as possible, this money from the State of Arkansas, and to induce Congress to appropriate its own moneys to redeem the pledge of the Government, and fulfil this trust. My first official action on this subject was as follows: By act of Congress, five per cent. of the net proceeds of the sales of the public lands of the United States in Arkansas was payable to that State, for certain purposes designated in the act. There was, also, an act of Congress in force, authorizing the Secretary of the Treasury, where there were mutual debts and credits between the Government and any other person, to offset any debt due by any creditor of the United States, against any debt, so far as it would go, due by the United States to such creditor. I interpreted this act as authorizing me to withhold this five per cent. fund from the State of Arkansas and appropriate it, as far as it would go, in payment of the interest which had accumulated on the bonds of the State of Arkansas, in which my predecessor, Mr. Woodbury, on behalf of the Government, had invested the Smithsonian Fund; thus saving a small portion of the interest which had accrued on these bonds. For this act I was violently denounced by the Senators and Representatives of Arkansas in Congress, as also by the Legislature and Governor of the State, and strenuous efforts were made, unsuccessfully, first to induce me to revoke my action, and, secondly, to have it overruled by the Government. But I adhered to it, and declared openly, that if such a breach of trust were consummated, and my action overruled in the premises, I would resign my seat in the cabinet. My official action, however, was sustained by an almost unanimous public sentiment of Congress, and of the country. Indeed, beyond the limits of the State of Arkansas, and the circle of the repudiators of Mississippi, my course was sustained and approved.

Now, then, let us see what was the action of Mr. Jefferson Davis on the question of these Arkansas bonds. On reference to the journals of the House of Representatives, of the Congress of the United States, it appears that Mr. Jefferson Davis took his seat in that body, as one of the members elect from the State of Mississippi, on the 8th of December, 1845. (P. 56.) When the bill was pending for organizing the Smithsonian Institution, and making good for both principal and interest, the sum bequeathed by Mr. Smithson that had been invested by the Government of the United States in these Arkansas State bonds, Mr. Jefferson Davis, on the 29th April, 1846, as appears by the official proceedings of the House, page 749, moved an amendment: 'To add at the end of the section the following'—'Provided, however, That if the Governor of the State of Arkansas shall make it appear to the satisfaction of the Attorney-General of the United States, that he has used suitable means to obtain from the Real Estate Bank of the State of Arkansas, payment of the debt due by said Bank to the State of Arkansas, but without success, then, in that case, and until the arrears due by the said Real Estate Bank shall have been received into the Treasury of the State of Arkansas, the said State shall be and is hereby declared to be absolved from the promises on the face of her bonds by which the said State heretofore pledged her faith for the due payment of the principal and interest of said bonds.' Now, then, it will be remembered, that the legality and constitutionality of these Arkansas State bonds never has been disputed. These bonds were issued by the State, under direct authority of law, signed by the Governor, with the broad seal of the State attached, and recognized by the Government of the United States, by the investment of this sacred fund in these obligations. Nay, more, this fund thus received by the State from the Government on these bonds, had been invested, under the law of the State of Arkansas, in a Real Estate Bank, created by that State, and the money loaned to the citizens of the State. That State Bank, however, in 1839, became utterly and notoriously insolvent, and never did or could pay one cent in the dollar on its obligations. And, more especially, never did it pay, after 1839, one single cent of the principal or interest upon these State obligations. Now, then, this institution, in 1846, being absolutely and totally insolvent, its funds having been wasted and squandered without the possibility of recovery, either in whole or in part, Mr. Davis offers this resolution to authorize the State to repudiate its bonds, and that the Government should look only to this insolvent Bank for the payment of the principal and interest on these bonds, amounting then to over $700,000. It was not alleged by Mr. Davis, or by any other person, that these bonds were unconstitutional. No such pretext was ever made even by the State of Arkansas. It was a most atrocious case of open repudiation. And here, it matters not, so far as this question is concerned, what may have been the obligation of the Government of the United States to make good these funds. That is a totally distinct and independent question. The true and real issue in this case is this: Was not the State of Arkansas bound to pay these bonds, both interest and principal, as it fell due, in, which bonds, by the request and authority of the State, the Government of the United States had invested this Smithsonian fund? This obligation of the State of Arkansas, both moral and legal, is undisputed and indisputable; and yet Mr. Davis moved the resolution before quoted, absolving the State from the payment of the principal and interest of these bonds, except so far as the assets of her own Bank, then notoriously bankrupt, should avail to make good these obligations. That is, the Congress of the United States, by solemn act, was to authorize the State of Arkansas to repudiate her solemn obligations. Recollect, this was not a case of Mississippi bonds, of which State Mr. Davis was then a Representative in Congress, but it was the case of Arkansas, another State, having on the floor of Congress its own Senators and Representatives. But it is a very remarkable fact, that Mississippi, for many years, had then repudiated her own bonds, that Mr. Davis justified and sustained that repudiation, and that now he appears on behalf of Arkansas to induce Congress, by solemn act, to authorize that State to repudiate her obligations also. Thus was it that Mr. Davis travelled out of his own State into another, to make the Government of the United States a party to the repudiation of her bonds by the State of Arkansas. Let me not be misunderstood. I do not mean to say, that Mr. Davis proposed or intended that the Government of the United States should repudiate its faith, plighted to the British Court of Chancery, to make good this fund. That is not the question. It is entirely collateral. But, what he did do was this, and there stands his own resolution, offered by himself in the Congress of the United States, which, if carried into effect, would have released the State of Arkansas from these bonds, or, in Mr. Davis's own words, 'The said State shall be and is hereby declared to be absolved from the promises on the face of her bonds, by which the said State heretofore pledged her faith for the due payment of the principal and interest of said bonds.'

Why should Congress release Arkansas from the payment of her State obligations? Why thus justify the repudiation of her bonds? Can any other reason be assigned than this, that Mr. Jefferson Davis was looking to the repudiated bonds of Mississippi, and was endeavoring to establish a precedent, by solemn act of the Congress, by which, if adopted as a principle, Mississippi, and every other defaulting State, could be justified in the repudiation of their bonds also. It is to the credit of the Congress of the United States, that Mr. Davis's resolution was rejected without a division, and without a count. When it is recollected, that at this very time, I, as Secretary of the Treasury, was appropriating the five per cent. found payable by the Government to the State of Arkansas toward the liquidation of these bonds against the protest of that State, the further meaning of these movements will be clearly perceived. Had this resolution of Mr. Davis passed the two Houses of Congress, absolving the State of Arkansas from the payment of these bonds, I could, of course, as Secretary of the Treasury, no longer have withheld that fund from the State, and appropriated it, so far as it went, toward the liquidation of the interest accrued and accruing on these bonds. It appears, then, by conclusive and official evidence, that Mr. Jefferson Davis's repudiation of State obligations, was not confined to his own State, nor even to the State of Arkansas; but that he desired to make the Government of the United States, by solemn act of Congress, a party directly sanctioning such atrocious violations of State faith and State obligations.

R. J. Walker.