Sacramento daily record-union., 1882-04-26
OLD Fozs WITH nza FACES.


produced the most injurious results to
the city. The idea of fighting the bond
holders" in the Courts das been tried,
and with such consequences as should have
settled that question forever. Many years
ago Mira. Fowle had S24, 7o0 worth of claims.
The came set OF men who are now wanting
to litigate the matter then declared that
the city could not be compelled to pay
this claim. Judge MeKune undertook TO
defend the case foT the city. 1t was liti-
gated up to the United States Supreme
Court. Judge McKune went to Washing.
ton, and there read all the law that has
ever been cited in support of that view.
But the Supreme Court did not agree with
him. He lost the case. The Court de
cided that the city must pay $50, 800.
Meantime the Fowle claim was drawing in
teress, and by the time the Legislature could
he got to fund it, it had reached the sam of
81. Gee, and the city has ever since been
paying 7 per cent. per annum on that
claim. Up to the present time the tax
payers have paid over $4,000 to Mrs.
Fowle or her assigns, and there is still due
and owing $1,000 more than the total
amount of the original debt. That is the
way the interests Of the taxpayers are de.
Tended by the men who think they know
| that the bondholders cannot obtain judg-
ment in the Courts. If the people OF Sac.
ramento want any moro assistance from
the attorney who managed the Fowle case
for them, they must be remarkably fond Of
litigation, and willing to pay remarkably
high prices for the pastime.
As regards the proposal to prevent the
payment of interest, and thus force the
bond-holders to terms, it is necessary to
poiut out that this device has also been
tried in the past, and that it only resulted
in running the debt up from 81, GOO, 900 to
81, 200, 600. Not to pay interest is in fact
simply to increase the debt, for interest
will accrue whether it is paid or not.
When the city had been led into deeper
debt than ever by the experiment which
it is now sought to revive, Judge McKune
wanted to apply his famous Fowle
tactics, and eight the bond-holders. -
Had he been allowed to carry out his plan
Sacramento would probably have owed
between So. 100000 and 81 900, 900 by this
time, or it would have been compelled to
perform its duties in the premises. But
fortunately for the interests of the city
Judge Beatty's financial ideas obtained the
ascendancy, and by the Funded Debt Com.
mission he succeeded in reducing the debt
$Sl7,000 Some people now talk of going
on with that work, as if it were possible to
pursue such a policy indefinitely. But it
must be realized that with the growth OF
prosperity in Sacramento the appreciation
of her obligations must proceed. We
cannot have the reality of prosperity and
at the same time avail ourselves of the
conditions which belong only to adversely.
We cannot, in other words, enjoy complete
solvency, yet negotiate with our cred.
itors from the standpoint of bankruptcy
When we were poor and in sore straits,
and our prospects were dark, it was pos
slble to buy up the bonds at low rates, but
now that we are becoming more prosperous
every year, our solvency is reflected IN
avoidably in the status of our obligations.
We presume that there is no man SO per-
verse and foolish as to wish the city back
in bankruptcy in order to be able to buy
up the bonds at low figure All will
agree that it is better to be fiouriahing,
even if this change does compel us to pay
more for our bonds. No doubt it would
be pleasanter if We could persuade our
creditors to take fifty cents on the dollar,
| but we are bound to look at the whole
question in business light, and we must
therefore ask ourselves what possible in
ducement there is for the bondholders to
accept such a proposition? 1t has been
said that the thing to do ia to refund the
debt at 50 cents on the dollar. That how.
ever is really childish proposition. A
little over year ago, and when there was
fear of food here too, an attempt was
made to get some of the bondholders to
agree to take so cents on the dollar. Not
one of them would listen to the offer.
Daniel Meyer asked what possible reason
he could have for exchanging one dollar for
half dollar? There was no answer to
that, and there is no answer to it now.
1t is not proposition with which practical
business men can go to other practical bust
ness men. There is nothing in it. We
offer, and can offer, no possible inducement
to the bondholders. Somebody has talked
about asking them to take new bonds at 35
cents, with guarantee. A guarantee
indeed Who is to give them any better
guarantee than they have already? Who
is to persuade them that if they take 80
cents, the same men who are now trying to
force that upon them will not presently
VAIN tLSHi w aSCepS ~ OE ID CSuJ5 ana
why should creditor who has security for
100 cents on the dollar, and who knows
that it is good security, be willing to ex-
change it for security for 80 cents?
II the bondholdera are disposed to ac-
cept less than the face of the bonds
they can do that now, and much more ad.
vantageously to themselves than through
any refunding process. But some people
are incapable of learning even from expert
ence. Notwithstanding the fact that it is
notoriously impossible to persuade any
bondholder to take so cents on the dollar,
it gravely proposed to offer them 50 cents,
and this puerile proposition is advanced
as the basis of new financial scheme
"Ah, but, itmay be said, 1--WE will frighten
"them into it by refusing to pay the in
terest." Well, you tried that before
and how did it end Does the FowIe
case give you any encouragement, Does
the outcome of the interest paying
period in the city's history hold out hopes