Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-02-07
THE CITY DEBT.
Funded Debt Commissioner Beatty Re-
plies to Certain Statements.

II
plies to Certain Statements.
We publish the following communica-
ton at the request of Judge Beatty, but
without indorsing it:
EDS. RECORD. UNION: Since the scheme
of destroying the Fund Commission by
means of new charter for the city has
fallen through, various stupid falseboods
and misstatements in relation to that Com
mission are put ahoat. but for what reason
it is hard TO understand. A citizen and
large taxpayer met me few days since
and stated he had heard suit was to be
brought against the Commission, charging
it with fraud in using the city's money to
buy up the city's debt at discount One
of the first objects of all sinking funds is to
buy up debt, of nation, State, city, county,
town, or other municipality, at discount.
From the time the first funding bill was
passed in 1856 to the present day, when
there are probably two or three hundred
funding bills in operation, l have not heard
of Court, a Judge, a lawyer, a legislator. q
casuist, statesman or divine who uttered
word against the legality, morality, wis
dom or justice of such law, except the
legal and editorial luminaries of Sacra-
mento.
And it is little remarkable that the
men who object to the morality OF the
Fund Commissioners in offering to buy
from bondholders these bonds at their
highest market value, thought itnot at all
immoral to say to those same creditors
when these bonds and coupons were worth
from 40 to 95 cents on the dollar I'VE
will pay you twenty-five cents for your
bonds and coupons if you will come in
and surrender them all. II not, we will
never pay you a cent" This is such q
mixture of stupidity, ignorance and bosh
that feel disguised that have to answer it.
Mr.. Anderson says the amendmentto the
Funded Debt Commission Act, passed in
1889, has completely destroyed the Com
mission. and any citizen taxpayer could at
once institute proceedings to prevent that
Board from acting under the amendment
of 1889. The repeating clause in
this Act abrogates the vital point of the
Funded Debt Commission Act, and
leaves the Commission without any power
or authority"
| should Judge from this rigmarole of
nonsense Mr.. Anderson never read the Act
referred to and has not got the least con-
ception of what the Act contains. There
is no repeating clause in the amendatory Act
of 1889, and if it was declared unconsti,u-
tional and void it would not materially
affect the operations of the Fund Commits
sioners The amendment of 1889 does
away with little of the red tape of the
first Act and perhaps saves the city 500 q
year IN advertising. 1t also provided
method Of investing our funds so they might
bear interest in case we could not buy
bonds and coupons That contingency has
never happened; and under the late decis-
ion is never likely to happen. To de-
clariDg this law unconstitutional would
only cost the city 500 year for seven or
eight years at most.
A city that quietly bore the outrage of
having the funds of the Funded Debt Conn.,
mission tied up for five years to indulge
Mr.. Anderson and his clients in an
abortive attempt to force the bondholders
to accept an impractical scheme will not
make a sour face at having to pay the
papers 500 year for extra advertising.
Mr.. Catlin. in q communication to the
Bee, asserts that it is only under the Act of
March 90 1885, that the Fund Commission
is now enabled to act at all; that under
that Act only is it enabled to give more
than thirty. five cents on the dollar for
bonds, and as they cannot be bought at
that price we are powerless to do anything
under our present organization whenever
any one chooses to have that law declared
unconstitutional, as they certainly can do;
that, in fact, the only hope for the useful
ness of that Commission is to get a new
charter and have new and original powers
conferred on the Fund Commission.
Mr.. White follows this up by full in
dorsement of Mr.. Catlin's views.
l have not attempted in this statement of
Mr.. Catlin's views to follow his language,
but l am sure have the substance of his
statement in concise terms.
First-There is nothing of all that mat
ter referred to by Messrs. Catlin and White
in the amendatory Act of 1889. The
amendatory Act to which l suppose he re-
fers was passed June o. 1887. We have
been acting under that amendatory Act
nearly three years. know during all that
time the question has been discussed as to
whether that amendment was or was not
constitutional. The holding of that Act
unconstitutional would have been a great
pecuniary gain to two or three of the large
bondh olders in San Francisco in two ways,
or at least they thought it would be so. In
the first place, forcing the Fund Commits
sioners out of the bond market, we would
have had surplus of funds for buying
coupons, and rather than let it lie idle, we
would pay them their own price for
coupons. Second, if we could not buy
bonds, then Davis and Meyer, who were
the only large spectators, could have die
tated their own price to be paid to outside
holders of bonds The small bondholders
would have been greatly injured by such a
decision.
Now, it would seem the San Francisco
lawyers are not quite so confident of get
ting that amendment declared void as are
our home lawyers. l will state here what
the amendment is that is so awfully alarm
ing to Messrs. Catlin and White: The
sixth section of the Act of 1872 provides
how we shall advertise for bonds, and
winds up with a provision that we shall
not accept any bids at a higher rate than 35
cents on the dollar. The amendatory Sec
ton follows the language of the old Act
until it comes to the proviso. The amend
atory proviso reads as follows:
provided no bid shall be accepted at q
higher rate than par" The word par" is
substituted for "at a higher rate than
thirty five cents on a dollar
Is this proviso an unconstitutional change
in the original Act? For over four years,
beginning back a year or more before l
framed that bill to be presented to the Leg
stature, | examined this constitutional
question with great care, and many times
within the last three years l have gone
over tue w uOlo BfOuUu, tAdIbiueu oil tuc
authorities l could find bearing on the sub
ject 1t was my deliberate judgment from
the first examination of the question, and
has been confirmed by my subsequent re-
view of the case, that the provision is con-
stitutional and the law can not be over
turned.
Yet am compelled to say that it is not
one of the sort of questions in regard to
which lawyer would be justified in say
ing, Certainly, this Act is constitu-
tional' He would only say. if a prudent
man, Il think the law is constitutional and
will be sustained"
If this amendment. however, is declared
unconstitutional and void, still the Com
mission will not be destroyed or its useful
ness gone. No doubt it will be impeded
and delayed in accomplishing the final pay
ment of the debt. The principal loss to
the city will be the delay and loss of inter-
est at times on our funds whilst they are
locked up in The bank instead # being in
vactad Rr1t that loss will he lphf COM