Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1881-02-28
THE CITY DEBT.

EDS. RECORD UNION: VIII you permit me
the use of your columns to reply to a commu-
nication of W. S. Mesick in the Bee of the
18th instant. Mr.. Mesick's communication
sets out apparently to prove one proposition
which l will not deny, that is, that it takes
less money to repudiate a debt and refuse to
pay it at all than to buy it up at % cents on
the dollar This is undoubtedly true, unless
the creditor shall sue and compel the debtor
to spend more money feeling lawyers and hid
ing his property than it would to have paid
the % cents.
He states some other propositions am not
willing to admit. First, that anybody else
could have funded as much OF the debt
with the 100000 raised for that purpose
as the Fund Commissioners purchased.
Second. that it would take at the
present time about 40 per cent. more money
to pay the balance of the funded debt than it
would have cost to pay the whole if the Fund
ed Debt Commission had never existed. These
two propositions show that MIR. Mesick is not
well informed as to the operation OF the Fund
ed Debt Commission. The City Trustees IN
1860 and 1861 mad money on hand with
which TO redeem the city funded debt, and
they did redeem S35, 900 worth OF bonds IN
these two years. But they redeemed them
at par. snd | presume if Mr.. MesiCk had been
in the Board he would have done the same
thing. never stated that the Fund Commits
sioners bought the Indebtedness of the city
at 253 cents on the dollar but that it cost
the tax-payers only 255 cents on the dollar in
the way of taxes. We bought the bonds at
an average of about 80 cents on the dollar,
and all the coupons we bought at an
average of about % cents on the dollar. But
whilst we paid these figures to the bond
holders the citizens only had to pay 25a cents
on the average. The difference between the
two came out of the interest fund created
under the terms of the Act. This interest
fund never cost the taxpayers one farthing.
[ have often explained this matter to the citi
zens Of this city. but have no space to repeat
it here If the 5000, 600 had been applied to
buying bonds and coupons in the ordinary
way, it would not have bought one dollar
more OF the debt, but would have bought
$500, coo less. In other words, III the ordi-
nary mode of buying and selling bonds
and coupons. we could not have bought up
over $500, 600 with taxes raised for that pur-
pose, but by uniting the taxes with my
scheme Of a compound interest fund.- We have
within a fraction of $500, 600, BY the end of
this year we will have at least $500 600 of
the debt, without another dime from taxes.
This $780, 900 viii stand the people in q
cents on the dollar, instead of 259 cents, as
it now stands.
Now, let me say what promised the peo-
pie in 1872, when | first proposed my sinking
fund scheme l told them that if they would
agree to impose on themselves tax of 30
cents per annum on the 500, or say, in other
words-a tax of one-half on one per cent. fer
eleven years, which / estimated would yield
about 5000, 000 and let me manage the fund,
/ IL 41o laht fhof
time-that is, that [ could with that fund
take up, say one million three or four hundred
tn )usand dollars of the principal, and pro-
portionate amount of the past due coupons.
| explained that the whole debt could not be
taken up in this way there would always be
a remnant in the hands of administrators,
guardians, ETC., which could not be reached.
At that time fifty cents would have produced
$50, 900 per annum, but | thought values
would increase, and probably eleven levies
would amount to S600,0 Well, l got
$500, 000-one- third what | asked for, and
soon took up little less than one-third the
entire debt, but more than one-third what
expected to take up with the $780,
900. The scheme, find by experience,
works better than l expected. The |
interest fund now brings in about S95, 900 a
year, and is constantly increasing. Although |
the bonds and coupons are constantly rising |
in value, they do not rise as fast as the inter-
est fund accumulates. Every year we get |
more bonds and coupons from the same |
amount of tax money than the preceding |
year. So far from the scheme having col |
lapsed, it is now more prosperous than it ever
was For the past two years We have got a
far larger amount of bonds and also larger
amount of coupons for the same tax money |
than we ever got before. And it the people |
will afford even tax of $500, 900 in the next |
twenty years, or say 49, 900 year. will |
that it will virtually extinguish |
the city debit reduce it to a smaller amount |
than I suggested in 1872 This is taking |
500, 600 less than 1 originally asked.
OF course, you only have my word for this. |
1t is impossible to detail all the operations of |
this bill in newspaper article. But if the |
Board of Trade will appoint committee of
nine land l would like to see William S.
Mesick and James McClatchy on that com. |
mittee), will show the modus operandi to
them and prove that l am correct, unless the |
committee should consist of men determined |
not to understand and not to be convinced.
Or.