The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1875-07-08
THE CITY DEBT.
s New ORLEANS, July, 1875.

THE CITY DEBT.
~ New ORLEANS, July, 1875.
Editor OF New Orleans Bulletin:
It is admitted by the Administrator Of
Finance that the city Of New Orleans is bank
rupt and can not raise the means to pay the
interest on the bonded debt, and provide for
current expenses.
This must be source Of deep modification
to every one in the community who has .
particle Of pride, and an honest desire to see
prosperity restored to this once great COM
mercial city. It is self-evident proposition
that we must inaugurate radical change in
the conduct of our municipal affirs, other
wise the debt will increase like q SNOWFALL
which has been rolled over to such immense
size that it cannot be further moved, and will
become worthless in the hands Of the holders.
| In crisis like the present, it is alike the
privilege and the duly Of every citizen to lend
his humble aid to solution Of this import
ant and all-absorbing question. I therefore
ask space in your valuable journal for the few
suggestions I am about to make. As yet
there has been but one plan offered, one door
opened to lead us out of the financial quag-
mire into which we have been driven by the
standardization of our city government,
and that is the premium bond scheme of the
Administrator Of Finance. Now let us ex-
the great panacea which is to heal and make
whole this diseased and rotten corporation.
It proposes to assume by the city an amount
equal to one-fourth of the entire debt, which is
to be called q premium fund, one-fftieth part
to be distributed annually to the lucky hold
ers of certain numbers to be drawn from q
wheel, or in short to turn the city government
into mammoth lottery Office. It is urged by
the friends of this project, that the debt can
be paid in fifty years by increasing the
amount of taxes annually, say $500, GOO the
! first year, and 81, 480, 600 the last year, and
the great merit Of the discovery is that it
avoids compound interest This is all very
plausible, and looks we'll on paper, but let us
look at the working ofthe measure. In esti-
mating the amount necessary each year to
pay the debt and interest, not one word is
said about the tax which must necessarily be
levied to defray annually the current expenses
Of the city.
It looks to me very much like putting off
the evil day and entailing on posterity q
heavy burthen which should be borne by the
people for whose benefit it Was contracted.
Besides it does not meet the issue squarely.
What we want is q speedy reduction of the
debt, in order to restore confidence and en-
courage investments Of outside capital in our
city property. considerable amount of our
| bonds are in the hands of parties who have
invested their money in them and rely upon
the interest to support themselves. What do
they gain by this lottery scheme? They may
not be successful in picking out lucky num-
Der in the fifty years, and therefore not realize
dollar in the meantime wherewith to buy q
loaf of bread. Another class Of holders are
foreigners and others. who are opposed to
lotteries on moral grounds, and are unwilling
by the use Of their names, their money or
their influence to encourage them.
It is further argued by the friends Of the
measure that these premium bonds, as soon
as issued. would have a marketable value far
greater than the bonds in their present shape.
Some even 60 SO far as to predict that they
will pass as currency at q very low rate Of
discount. I confess can not see upon what
they base their bright hopes and predictions.
/ have always been of the opinion that it is
the wiser course for either corporations or in
dividusls, when they get into pecuniary
them into their confidence, and by making
an honest exhibit of their affsirs, they can
come to some understanding that will be of
mutual advantage.
Corporations are not sovereign, and cannot
therefore repudiate, else the city might do as
the State has done, cut down the debt to an
amount upon which the interest could be as
sured beyond contingency; but being, as be-
fore remarked, debarred from this right, I
would respectfully recommend that the Mayor
be requested to invite, by publication, meet
ing OF all the creditors of the city, and lay
before them the true condition of our fnan-
cial affairs, and show them our ability to pay
promptly the interest on portion of our
debt, If relieved Of the residue. I think it
can be shown clearly and conclusively that it
would be to the interest of creditors to make
case of jetison, and, by throwing overheard
one-half of the amount of their claims, save
the other half, which, under the present man
agement, bids fair to be lost.
Let us assume that the debt, including in
terest to date, is $24 900, 600 (which / think
is rather under than over the mark, and that
it is worth to-day nominally thirty-five cents
on the dollar, and is depreciating daily. Now
il, by consent of the creditors, the amount
was reduced to $12, 600, 600 and bonds issued
for the same, bearing per cent interest and
payable in thirty years. with full guarantee
that no debt shall be created to their prtju-
dice. and that tax shall be levied especially
to pay the interest, and to be held as sacred
trust for that purpose, will venture the
opinion that they would command as soon as
issued ninety cents on the dollar, and would,
in very short time, be worth dollar for dol.
lar. In this way the creditor is assured fifty
cents for what is now worth nominally thirty
five cents, with every prospect Of q further de-
cline. E
will say few words respecting the taxes
now due the city, and point out a way in
which they can be made available without re-
sorting to courts of law. and expanding large
sums for advertising and costs. A large num-
Der of the defaulting tax payers are those who
have ample means to pay, but avail themselves
of the law delay because they can use their