The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-12-13
CONSOLIDATED BONDS AND THE CITY


accord with our views of journalistic duty tt
) seek to influence the judicial determination
The case to which reference Is now made
Montgomery VS.. The City, is one of great Inn
portance to the public. II Is Of special inter.
est to two classes of bondholders.
The first class represented by the relator
includes the holders of consolidated bonds,
which were issued by the consolidated city in
1862 The chief object of that act, which is
expressed in the title, was to consolidate the
city OF New Orleans and provide for the gov
government and administration Of its
affairs.
The city of New Orleans had been pre-
viously divided into three municipalities.
with independent governments for oil other
purposes save few in which the autonomy
of the old corporation had to be preserved
On the return to the old city organization
In 1862, the new consolidated corporation I'M
dertook to assume and fund all the existing
obligations of the old city and of the three
municipalities into new class of bonds to be
called consolidated bonds, for which the fol-
lowing provision was made.
Sec. 81. Be it enacted. etc.. That the debt of
tho general sinking fund. commonly called
J tho old city debt, and the debts Of the
I three municipalities, whether In the form of
bonds, notes. interest coupons, cash warrants.
| shall be assumed and paid by the city of New
| Orleans. and said city is hereby declared liable
| therefor, The Mayor, controller and treasurer
the two boards Of the Common Council shall
constitute u commission to be called the COM
missioners Of the consolidated debt of New Or
leans; and they shall have power to issue bonds
of the city of New Orleans, having not more
than forty years to run. with interest payable at
such sue place a! as may be agreed on between said
the bonds are issued in semi-annual coupons.
IN exchange for any bonds, obligations or debts
of tho old corporation or of any of the munici-
palittes. whether matul ed or not, or to sell the
new bonds and apply the proceeds to tho pay
ment OF the matured debts OF the old corpora
purpose. The bonds thus issued shall form q
stock to be called the consolidated debt of New
Orleans. At the lime this, act gots into opera
debtedness OF the old corporation and Of each
municipality shall be filed In the office of the
controller. by the secretary Of the board OF
iquidators and the municipal controllers re-
spectively. when the commissioners of the con
solidated debt shall proceed to divide the debt
OF the 2d CORPORATION between the several mu
Of real estate within the limits of EACH according
to the state t. .s. assessment roll for 1851 The
with its individual indebtedness at the time
q this act goes into operation. shall constitute
t the separate ta debt Of each municipality and
No. One, No; Two, No. Three. The Common
Council shall annually, in the month Of Jan
gary; pass an ordinance to raise the sum Of six
hundred thousand dollars by special tax on |
real estate and slaves, to be called the consoii
dated loan tax and the rate per cent of said tax
II each municipality shall be in proportion to
lutions Or other acts passed by said Council |
after the first day of January In each year shall |
the consolidated loan tax shall have been pre-,
viously passed. At the end of each and every
year any surplus Of the consolidated loan lax
OF all the interest and the expenses
Of the, management Of said debt. shall be
applied to the purchase from, the lowest bidder
shortest period to run; and the Common Conn-
Gil shall have the right of rejecting all bids de-
Which PURPOSE pubic noce shall be- eyen i bv
the controller in the official gazette for thirty
days, inviting proposals from bondholders for
3cribed. From and after the passage of this act
no obligation or evidence. of debt Of any. de-
b m those herein anho
,r under its authority: nor shall any loan be
contracted unless the same be authorized by o
'ity, which shall be taken in the manner pre-
'cribed by the City Council. after ten days pro-
, lanai on by by the Mayor in the newspaper
lance creating debt or loan shall he valid,
lnless such ordinance shall prescribe ways and
means for the punetual discharge ut maturity Of
/
uch ordinances shall not be repealed until |
principal and interest of the capital borrowed
r the debt incurred are fully paid and dis
harged"
With these extraordinary precautions and
ecurties these new bonds, when put in the
market, were eagerly bought at rates above
ar. They were regarded as first class secu-
tiles, and were sought as safe investments
or trust funds and for deposits by the free
anks, of which there were large number
hen existing. Before the war the city gov i
rnment never failed punctually to carry out !
he provisions of this section of the act of con-
|
After the war, which destroyed large DOR q
ion Of the property which was pledged for I
be redemption of this debt and plunged the
orporation into the embarrassments in reIa- t
lon to its finances, from which it has never b
the provisions of the act were \
OF promptly and regularly executed. }
very administration of the city has I
roved itself in condition Of incapacity to n
leet its bonded Indebtedness, its interest, a
nd to defray the expenses of the govern t
lent. Each administration ran behind from r
half to nearly million Of dollars of meet 0
lg its obligations. To bridge over these b
aances there have been numerous of the t
sual shifts OF corporations In such situations, n
lch as the issue of new classes of bonds and C
arious descriptions of paper Indebtedness p
nd the substitution Of new for old bonds an o
10 like devices of embarrassed administra- p
,rs Of political CORPORATIONS These resorts '
ally postponed the day Of settlement or in Il
olvency and accumulated the interest &C il
,unt to an enormous sum, deluged the mar &
1t with paper issues Of the city, which de- tt
reciated their value so as to subject the city "
more than double cost in all its contracts "
Id expenditures. 81
Finally, with the incoming of the present n
there was to be an entire Il
lange in the financial policy of the city II
Ell
The new policy was based on the following q
'pposidons: n
\ The prohibition Of all paper issues AMI
II ~ =