Evening star. [volume] (Washington, D.C.) 1854-1972, 1878-10-03

DISTRICT INDEBTEDNESS.
The 1865 Bonds and the Power to
Create Sinking Fund-ImpOrtant
Letter of the District Commits
OFFICE OF THE COMMISSIONERS OF TIE
DISTRICT OF COLUMBIA, Washington, October
lst 1SlS-Hon. James Gilft!d1., Treasurer L.
SmDear Sd az 81. Sr;GA letter relating to the So
by you to Messrs. Hallgarten 4 Co, No. q
Broad street, New York, under date of the
18th instant, is calculated to and will create
erroneous impressions which should be cor.
rected. AS quoted by you the inquiries of
that firm were: lst. What is the amount of the
what pr0pOrtlonate amount is periodically
reserved for the creation of sinking fund?
1t is the reply to the Sd of these inquiries to
which exception is taken, since there is al
implied charge of neglect of duty on the part
Of the Commissioners of the District. The act
directing stg II the issue Ne Of the Se5 bonds imposed
no duty OF any kind in respect to them upon
the Commissioners. 1t conferred authority
upon no one to provide sinking fund, but it
pledges the faith of the United States to the
Creation Of Sinking fund fhis pledge na as it re
CARDS the interest has been strictly observed
through various enactments of Congress, and
finally by providing permanently for its pay
ment, the law now requiring the Secretary of
the Treasury to pay II precisely as in the case
of any other of the United States bonds: but
Congress has failed to legslate in regard to
the sinking fund.
1t is feature of the law directing the issue
OF the 365 bonds-lsee act of June 20, 1874,
and principal shall be paid Jointly by the
United States and the District of Columbia
Payment is to be made in part by proportion
al appropriations by Congress, and in part by
tax levied upon District property. Until the
United States shall have appropriated their
proportion of the sinking fund, and shall have
for its portion, the Commissioners have no no
power in the premises. SO much they desire
10 state in respect to their execution Of the
law.
The faith OF the United States is pledged to
the creation of sinking fund: They alone
have the power to do this. Their power is
OF d failure to exercise it rests with the United
States, and not the bondhOlder, whose bonds
are secured by their. pledged faith.
Tie act directing the issue of the 3.65 bonds
also directed the appointment OF a committee
OF the two houses of Congress to ascertain
among other things the proper propOrtionate
Gelraylng the expenses OF the government of
the district Of Columbia. This proportion is
now fixed by the act OF June IL, 1873, at fifty
per centnm of the total required for all pur-
poses, including interest upon the debt. There
can he little doubt that this question being
settled provision viii be made tor the sinking
fund as contemplated by Congress; for appro
p1iations by the United States under this set
tlement do and will much exceed the amount
required for interest and sinking fund upon
both ct the debt proper of the District and the
800 bonded debt. The law distinguishes be-
tween the bonded debt proper of the District
and the g debt, the one created by former local
governments of the District, and the other by of
ticeIs appointed underlawS of the United States
by directing that the Secretary of the Treasury
shall pay the Interest on the latter debt, and
that it shall be paid by the Secretary OF the
treasury at the treasury in Washington. or
the oiilce OF the Assistant Treasurer in New
YORK: The interest upon the other debt is
paid byyou as manager of the sinking fund Of
the District, and because the Treasury of the
United States is the depository of the District
revenues. There all payments on account Of
its expenditures are made and accounts rem
dered, bat you derive no powers of SUPER
VISION as respects the 3.65S because of your
duties III regard to the sinking fund Of the
District. The former sinking Iund commits
sloners, 1t Is rue, were continued in Office by
act OF Congress and directed to prepare those
bonds, but that was 4 simple ministerial act
which who any clerk ia the the Treasury might Lave
performed as well. The bonds when 50 pre-
pared We're handed over to the Secretary of
The Treasury Tor REGISTRATION, and were thus
III ldct 'sucA by the Treasury department. Ir
Is important to keep this distinction in The
two classes OF Indebtedness in view. for il VIII
be seen that i: is a mi>nomer to call the 365s
BONDS OF NE Districf OF Columbia. The officers
issuing them were all officers of the United
states. IN cf1lce by virtue OF laws OF Congress.
and not OF the District. which then had no cor
p0rate existence ard no power TO issue bonds.
The bonded debt proper of the District
amounts TO $S,563,i 400, on which the interes, Is
SOL 1880: This bonded indebtedness has been
reduced @ @ since June 20, 1874, by the amount of
$52O,GS0.lS. Besides which water certificates
have been paid TO the amount of (principal
and interest at time of redemption( $l3l 557.65,
making total reduction of funded debt OF
$lOl ,63l. s.; In addition to this, temporary
loans, with interest, OF the late board of public
WORKS ana late District government, found
existing June 70 1874, have been paid Off
debtednesS paid Off since the organization OF
Ihe q eoo commission ON government, June %, 1874.
The effect has been to greatly improve the
credit OF District securities.
MessrS. Hallgarten & Co. referred to recent
opinion OF the attorney general of the state of
a more full answer to the second query of the
firm than you were able to give 1t Is stated
by that officer that the bonds prepared to be
This is wholly unfOunded. The act of March
IA, 1876 prohibits absolutely any further issue
II is right to state however, that the former
commissioners OF the District recommended
see their report dated November l, 1877. pages
TO that Congress should direct the further
issue Of 81, ,lS7,24.5 81, to complete payments of
certain ascertalned indebtedness OF the same
class 10r the payment OF which the bOnuS were
originally issued. Congress- however, has
eyinced a decided inGisposition to authorize
lufther issue, and it may be assumed that in
amOInt above stated, and then the total out
standing. would be increased to $l4 $50 45f.52.
the annual interest On which would be
The 3.65 bonds of the District of Columbia
are the only bonds IN existence to the payment
of which the faith OF the United States is
pledged in terms of the precise character ex-
pressed in the statutes Of the state of New
York, limiting and classifying investments by
savings institutions. The words of the law OF
New York, as quoted by the Attorney General
OF that state, are: 81. In the stocks or bonds
or interest bearing notes and obligations of
the United States, or those for which the faith
OF the United States is pledged to provide for
the payment of the interest and principal
The language of the pledge In the act author
!Zing the issue of 365 bonds iS "And the
faith OF the United States is hereby pledged
that the United States will (by proper proper
tional appropriations as contemplated in this
act, and by causing to be levied upon the
property within said District such taxes as will
90 so, provide the revenues necessary to pay
the interest on said bonds as the same may
become due and payable, and create sinking
1und Tor the payment of the principal thereof
at maturity" That part embraced above,
within brackets. does not concern the boud,
hSiuer The pledge is precisely what the laws
OF the state of New HcC."sa require it shall be.
Inc 1alth OF the nation is pledged to provide
LOT the payment OF the interest and principal.
BY order OF the Commissioners.
(Signed) S. l.. PHELPS, President.
THE YELLOW FEVER RECORD at New O.
leans yesterday was 81 deaths and 1S5 new
eases. The total mortality now fO0tS up go
Joseph Cashell, assistant signal officer, and A