St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-02-14
THE CITY's CREDIT.

dSdlllSb Luc Guy vi Oh. L duJ, u ICCONcI
! judgment on certain certificates of i'll
| debtedneSS issued by the board of edu-
cation, and the payment of which is
guaranteed according to law by the city
! government. Judge SHAW, of Mime
apolis, appears as the plaintiffs attor-
| ney.
Under the act creatingSthe st. Paul
school district the board OF education
| may issue the promissory notes of the
city when it is necessary to anticipate
| the collection and distribution of taxes.
The law provides that these shall be re-
| deemed out of the proceeds of the next
ensuing TAX levy as soon as they become
available, and its plain intent and mean
ing is that such certificates Of indebted
ness shall not be made payable at
any definite day, but that they may be
taken up at any time when there are
funds in the city treasury for the pur-
pose. They differ from a city bond in
this respect, because city bond runs
| for long and stated period. Under
the law the holder of a certificate of i'll
! debtednesS is liable to lose his invest
ment at the pleasure of the borrower by
having itpaid off. To compensate him
for this inconvenience. he receives a
higher rate of interest than the bond
owner, so that he may not feel that his
money is earning nothing if it is re-
| turned to him Unexpectedly when he
has no place ready in which to rein
| vest it.
Such certificates of indebtedness are
very peculiar forms of security. They
are practically promises to pay at any
ime when the next tax levy brings funds
| into the city's hands which may be used
| for that purpose. instruments of this
| kind, were their real nature known,
would not find very ready market
| abroad; and, in point of fact, most of
/ them have been bought by local banks
| and trust companies. OF course it is
| impossible to draw promlsSory note
| payable as soon as convenient after date,
/ so that six months or year is usually
| inserted Oh their face as the length Of
time they will have to run. The local
institutions which have invested in
them have recognized that this period
was purely conventional. and that thew
might be taken up before that time if
! the city had the money for the purpose,
| or that they might be allowed to run
over the time named if this were nee
! essary in order to make their date of
! payment coincide with the collection of
tax levy.
When the Mutual Life Insurance com
| pany bought the certificates on which
| suit has been brought, it understood
| thoroughly their nature. Nobody asked
! it to buy them. The st. Paul banks
would have been glad to get them, be-
cause they carried per cent interest.
| But the Mutual Life Insurance company
wanted them badly, and they were sold
to it. They we're issued i'll the early
winter, and in them was inserted the
conventional period of one year as the
time of their maturity. There would be
| no funds available for their redemption
at the~da named. because the taxes
| would not be collected till the spring.
! A local purchaser would have under
stood this. The Mutual Life Insurance
company understood it. 1t never oc-
| Cured to the city officials that there
would be any difficulty about having a
| Z per cent note of st. Paul run as
| long as it suited the convenience Of the
city. 1t is against all reason that an
| investor having bond backed by the
| pledge of the credit of city OF
10000 people and bearing Z per
cent interest would prefer to have
it run short time rather than
long one. A bankrupt to whom 1t
was matter of life and death to realize
on his principal might, but it was as
sumed that the Mutual Life Insurance
company was as solvent as our local
banks, and would be glad to hold the
certificates as long as the city cared to
leave them outstanding. Had it not
been so, would have been just as easy
to have made them payable eighteen
months after date, when this springs
taxes would have been collected: and if
the Mutual Life Insurance company
had not wanted them under such cir
cumstances there were thousands of
customers who did.
The city government made serious
mistake in all this, but an eXcuSable
one. 1t did not calculate OH the fact
that a life insurance company which
has enjoyed the patronage and friend
ship of thousands of our citizens would
he capable of an exhibition of deyilish
malgnity against our city at the first
opportunity presented to it. There is
not the slightest pretenSe on the part OF
the Mutual Life Insurance company
that it has brought suit because it will
in this way secure the return of the
money invested in the certificates more
quickly. 1t knows thoroughly that il
will be repaid as soon as the taxes for
1890 have been paid in and the first
apportionment of them made among the
different departments, and that this will
be before it can by any method put its
claim in Judgment. But this institution,
with hunchback'S joy i'll its task, has
undertaken to work FOOLS revenge for
something which has done it no harm.
1t has deliberately employed the
attorney who Of all others stands
forth as conspicuous for his antagonism
to the advancement of this city, and
with his assistance purposely plots the
injury of municipality in which it has
thousands of policy holders who have
co-operated in the past for its interest
The GLOBE makes no further comment
on its action than this, because il be-
lieves that st. Paul's credit is superior
to such assaults.
There is another thing more important
than this, however, on which our city
government did not calculate when il
made these certificates run for twelve
instead of eighteen months. 1t never
would have occurred to the Mutual Life
Insurance company to have engaged in
this malicious mischief had there moi
been spread abroad in the past six
months so many attacks Oh the credit
and stability of our city. The evening
Republican paper of st. Paul is foul
mouthed sheet. Night after night il
| hoe unfinished in had English accauIfs