New-York tribune., 1884-11-30

The NEJT CONSTITUTIONAL AMENDMENT.
1t is not surprising that the amendment to
the Constitution of this State, ratified at the
last election, should cause embarrassment to
our municipal authorities. 1t provides sub
stantialy that no city of this State of more than
100000 inhabitants shall after January 1,
1885. become indebted in an amount to exceed
ten per cent of the assessed valuation of its
real estate /; and that if Its debt already ex-
ceeds that proportion, it shall not he al
lowed to incur any additional debt until the
amount has been reduced below that limit.
These are wise provisions. A debt equal to
one-tenth Of the assessed valuation of its real
estate ought to be sufficient for the practical
needs and purposes of any city, while the GER
taintv that the Indebtedness is to be so restrict
ed will not only give stability to the value of
city bonds. but will restrain undue and extrava-
CANT expenditures. In the case of this city the
amendment comes none too soon.
The situation in a word is this: Ten per cent
of the assessed valuation of the real estate of
this city. estimated in conformity TO the amend
ment, would he %l11,07G l5o 20. The total
amount uf bonds issued by the city and out
standing on January l. 1875, will be 1929
S1O,5ID 80. But Of this amount F35, ,4Tp-
57p 30 are in the hands Of the Sinking Fund
Commissioners as security for the payment of
the other indebtedness, The question ia IA the
actual debt of the city Hiy0,sln,bTp M /
or Is il the difference between that
sum aud thn 'lA,l7p,a1n ~ IN tho hands
Of the Sinking fnnd Commissioners,
namely HOO,AAl ,OODi The Corpora
iion Counsel, hy course OF reasoning ot great
skill aud toree, reaches the conclusion that the
amount ia the Sinking Fund cannot be deduct
ed or Disseminated from the total of the bonded
debt, and thai therefore the indebtedness of
the city is already beyond the limit sanctioned
by the Constitutional Amendment. But the
matter is evenly balanced and turns on nice
distinctions. The correctness of Mr.. LacOmbes
opinion that the assets OF this city-its real es-
tate, etc.-are not to be deducted from the
apparent gross total, may freely he conceded
without agreement with his main proposition.
The bonds held by the Sinking Fund Commits
sioners, in Mr.. Lacombes argument, are not
owned by the city within the common meaning of
ownership. The city exercises no control over
them. They are simply held in trust by the
Commissioners to insure the payment OF the
rest of the city's debt. When the Commission
ers purchase the bonds of the city, secured by
the Sinking Fund, that does not extinguish
Them they are still outstanding obligations.
And the fact that the method of their payment
is cancellation at maturity by the Commission
ers does not alter their character as an mde5t-
edness tefore maturity.
The distinction the Corporation Counsel
draws, however correct it may be legally, is a
fine one. and he will meet with some practical
objections. Whatever the legal designation of
the bonds held by the Commissioners, il will be
contended, the practical fact is that this is not
debt which the city will be called upon to pay.
If the city were to liquidate its entire debt to-
day it would pay it with AMOUNT of cash
equal not TO the entire amount of outstanding
bonds. but TO that amount less the amount in
the Sinking Fund-not $125. 810,579 33, but
$50, 1881 600. Granting that the Sinking Fund
Commission is a legal entity, as Mr.. La
combe insists. distinct from the city,
the Commissioners are not the creditors OF
the city in any ordinary sense of the word.
They hold, it is true against the city certain of
its obligations. But they hold them only as
security for the payment Of other of the city's
bonds. They are not redeemed on maturity as
the other bonds are-they are simply cancelled