Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1881-02-24
WHO ARE IN THE INTEREST OF TIE
BoNDHoLDERS?

EDS. RECORD UNION: It is forever the
device of parties to controversy to appeal
to popular prejudices. This is illustrated by
an already apparent disposition manifested
bv both sides to the controversy concerning
the best policy of the city in relation to the
municipal indebtedness. 1t is unfortunately
not unusual to hear disputants declare that
their opponents are acting III the interest of
the bondholders. Every prominent citizen
who has been an active participant in the
current discussion is charged In turn with
being an attorney Of, or in part, OF the bond
holders This is not merely uncharitable, it
| is low-minded, unmanly and vulgar.
The question, however, as to which propo-
sition will inure to the greatest benefit, is one
of simple solution. a party has arisen pro-
posing to refund the city debt at 80 cents on
dollar This proposition embraces in its
plan the rsfunding of the outlawed cou-
pons delinquent since 1S71-that is to say,
to issue new bonds in one-haf of the sum for
coupons already void by the operation Of the
statute of limitation. The friends OF the re-
cent tax levy oppose this. Now, plainly,
Which plan is il the interest of the bondhold-
ers that which proposes to revive one-haf
of lapsed debt, or the one which declares
that the city should avail itself OF Its legal
rights
The opponents of the tax levy declare that
the bonded indebtedness can be refunded at
80 cents on the dollar, and admit that the
new bonds will be worth par value. The
friends Of existing methods show, as an indis.
putable fact. that the debt is being dis
charged at cost to the taxpayers OF 23a per
cent, Let us appeal to the arithmetic for
information as to which Of these plans Is in
the interest of the bondholders. The bonded
indebtedness Of the city amounts to 81, l00,-
O00 Refunded in bonds at 30 cents, and the
new principal of the debt would become
$3.50. coo which, it is freely admitted, would
have to be paid at par. But pay this debt
by judge Bsatty's plan, now IN successful
operation, at 253 per cent, and the cost to
the taxpayers of discharging the whole debt
wouId be but $3.50, 500. Which is best for
the bondholder, the creation of new debt,
the principal of which cannot be discharged
for less than $3.50, 900, or the payment of an
old debt, which is being actually discharged
for $3.50, 500?
These statements are made in defiant chal-
Ienge Of all successful contradiction. Take
the facts into candid consideration, and there
is no obscurity in the conclusion that the re-
funders are the real friends of the bondhold-
ers, It is not sought to be conveyed that
they nave Deeh proGuleu ~ iolSS ItilS plah
upon the city by the bondholders. 1t is
merely asserted that their plan increases the
value of the obligations held by the city's
creditors. Can any man deny this?
One further consideration. The tax of 100
cents on the one hundred dollars, about which
so much fuss has been made, produces to the
interest Of the sinking fund about $4,000
OF this amount about S26, 900 goes into the
hands of Judge Beatty and his associates to
pay interest on the bonds held by them in trust
for the city. This 1000, it will be seen,
can be so used as to discharge 100000 of the
public debt by the purchase of other bonds to
be held in trust. Is this unwise, or injudicious,
or extravagant? Now the real truth is, that
no citizen who will take the pains to inform
himself of the merit of the existing plan will
ever consent to any change whatever.
A Cool OBSERVER.