State of South Carolina Known as the Whorehouse Bond - 1871 dated 100£ Sterling Bond - Printed Signature of Robert Scott
Inv# GB5322 Bond
100£ Sterling Bond printed by American Bank Note Co., New York.
The State of South Carolina Sterling Funded Debt 6% Bonds of 1871 stand as a notorious chapter in Reconstruction-era finance. Issued during the administration of Governor Robert K. Scott, these bonds were intended to consolidate state debt and were payable in London at a 6% interest rate. However, the issuance became embroiled in corruption. While initially authorized for $1.2 million, Scott’s administration reportedly issued over $22 million in debt. This massive over-issuance led to a severe crisis of confidence, resulting in both Governor Scott and State Treasurer Niles G. Parker facing impeachment for bond fraud in 1871.
These financial instruments earned the infamous nickname “Whorehouse Bonds” due to contemporary accounts suggesting that state officials approved additional debt while frequenting entertainment venues. Because of their fraudulent nature, the bonds were eventually repudiated and canceled by the state, rendering them worthless as financial securities. Today, they are primarily valued as rare scripophily collectibles. Surviving certificates typically feature perforation marks indicating their official cancellation and are highly sought after by collectors for their association with one of the most contentious periods in American fiscal history.
Robert Kingston Scott (1826–1900), a former Union general and physician from Ohio, served as the inaugural governor of the reconstructed South Carolina from 1868 to 1872. Despite being often labeled a “carpetbagger” by his critics, Scott’s administration was characterized by the radical experiment of biracial democracy, primarily supported by newly enfranchised Black voters. During his two terms, he spearheaded progressive reforms, including the establishment of a statewide public school system that educated over 100,000 children and the development of state infrastructure through railroad and mining subsidies. However, his tenure was also marked by severe civil unrest, as he frequently clashed with the Ku Klux Klan. In response, he armed Black militias and requested federal troops to suppress white supremacist violence. While his social reforms were significant, his administration faced intense scrutiny over a tripling of the state debt and allegations of financial corruption related to state bonds. Scott narrowly avoided impeachment in 1872 and eventually returned to Ohio in 1877 to evade potential prosecution as Democratic “Redeemers” regained power in the state.
Niles G. Parker, a former U.S. Army Colonel who commanded the 1st South Carolina Volunteers, served as the State Treasurer of South Carolina from 1868 to 1872 during the Reconstruction era. As a prominent Republican figure under Governor Robert K. Scott’s administration, Parker’s tenure was marred by significant allegations of financial misconduct. He is often cited in historical records as one of the most corrupt treasurers in South Carolina’s history due to his involvement in bribery and illegal bond schemes. Following the end of Republican rule in the state in 1877, Parker was arrested in Jersey City on a requisition from South Carolina Governor Wade Hampton for his past actions in office. He eventually relocated to Dakota Territory, where he practiced law and engaged in real estate.
A bond is a document of title for a loan. Bonds are issued, not only by businesses, but also by national, state or city governments, or other public bodies, or sometimes by individuals. Bonds are a loan to the company or other body. They are normally repayable within a stated period of time. Bonds earn interest at a fixed rate, which must usually be paid by the undertaking regardless of its financial results. A bondholder is a creditor of the undertaking.
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