CITY AND SUBURBAN
For sale: the billion-pound lampshades Mississippi gets away with it and
CHRISTOPHER FILDES
he governor of Mississippi can breathe more easily. His most tenacious creditor has given up the struggle, and is itself in the hands of the liquidator. As for the Mississippi bonds, issued in London a century and a half ago, they will now never be honoured, and have value only as collectors' pieces or as lampshades. They went into default in the run-up to the Civil War. Victorian investors, left holding the baby, formed the Council of Foreign Bondholders to press for payment. The Council grew busier as the bad example spread, until finally 60 countries were behind with their bonds — most expensive- ly of all, Imperial Russia and China. Still the Council plugged away, extracting a promise here and a part-payment there, punctiliously approaching each new gov- ernor of Mississippi to tell him that he could transform his state's credit by paying its bills. How sad a sight it now is to see Touche Ross winding up the Council's affairs — and completing its task with a public auction of busted bonds! The Coun- cil's collection must be unique, and should be preserved and displayed as a perpetual warning of the truths of the market-place, of creditors' credulity and debtors' deprav- ity. In June, though, at the auction, they will all be scattered — the Council's Mississippi Union Bank 5 per cents of 1838, Planters Bank of Mississippi 6 per cent 1831, Mexico 6 per cent Gold Bond 1913 . . . how the old names came round. Only the other day, the Bank of England stood down the two surviving members of the committee established by Montagu Norman to chase up the reconstruction loans made, after the first world war, to Eastern Europe. We are going to need that one again. The most dangerous of all market illusions is to say: This time, it is going to be different. How many billions would have been saved if the bankers of London had consulted the Council of Foreign Bondholders, rather than taking the word of Walter Wriston at First National City Bank that sovereign coun- tries do not go bust! Mississippi never went bust, but its bonds are busted. Now they are on the block, in a sale that will go down as the financial Mentmore. Already, though, to the minds of Touche Ross, their next auction must suggest itself: 'By order of the Directors of Bigfours Bank. A unique assortment of loans to curious and interesting countries, including Mexico, Argentina, Uganda, Nicaragua, Sudan, and Ululand (described as the former Swiss Equatorial Guinea, but now believed by the directors to be non-existent). Original- ly valued in total at £4,400 million. Suitable for framing, or would convert into table- mats. Everything must go!' I am sorry, though, to see Mississippi get away with it.
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