Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-02-28
SHOULD BUY BONDS.
Arguments Before Full Bench on
the Question of Properly
INVESTING THE SINKING FUND.
W. J. Howard Objects to the Money Lying
Idle in the. Banks.
POWER VESTED IN THE CITY COUNCILS

The contention of w. J. Howard that the
sinking fund of the city of Pittsburg should
be invested in bonds and thereby produce a
revenue instead of lying idle in the city de.
positories, was argued in Common Pleas
Court No. 2 yesterday, with Judges Ewing,
White and Magee on the bench.
Howard asks that the Court appoint a
commission to take charge of the sinking
fund, and requests that the city of Pitts
burg, Controller, Treasurer, Finance Com
mittee and the city repositories be restrained
from any further use of the fund.
George Shiras, Jr., representing the city
repositories, opened the case by stating that
the money was deposited in the banks in
good faith, and was regarded by them as
sacred trust. The money was not used for
investment or self5galn; therefore, there
could be no conspiracy, and the case, as
against his clients, should be dismissed.
Thomas Carnahan, representing the city,
held that the bill was defective, as it did not
include the entire City Council as defend
ants, as Councils authorized the action COM
planned of. Mr.. Carnahan continued:
Beyond the Power of the Court
The Court has not the power to take away
legislative power vested in a municipal body.
If there is any breach of trust, the Court can
interfere, but it cannot annul the powers vested
in Councils. The depositing of the sinking
fund in the city repositories is legal contract.
The question is, how far the Court can so in
inquirIng into the motive of Councils in pass
ing legislation. A mere naked allegation of
fraud cannot stop this. The charge of mistrust
shows total misapprehension of the sinking
fund operations in the city. There is nothing
in the law which in any manner places the dis
posal of the sinking fund outside City Councils,
and yet the Court is asked to appoint a COM
mission for the investment of this fund. and
Councils is not given an opportunity to De
heard.
Judge White interposed to say that Coun-
ellis were not accused of fraud, but OF neglect
of duty.
Mr.. Carnahan continued by declaring
that the sinking fund is being steadily in
vested in bonds, $500, 900 having been so in
vested within the last two years. All the
money had not been invested because there
had been no opportunity to place 1t.
This was not a breach of trust, and such an
allegation had not been sustained.
Wanted the Suit Thrown Out.
"The bill is not filed in good faith and
should not be allowed to stand, Mr.. Carna-
han went on. SIT was filed for the purpose
of attacking certain individuals and cor
porations, and was not filed by the plaintiff
as taxpayer or in his Interest"
Johns McCleave, representing Mr.. How
ard, stated that "the bill is that of a tax
payer of Pennsylvania, State represented
in the Senate by man, If not OF silver
tongue, of the silver pool. 1t is filed by
citizen OF the State, not of Delaware, as has
been stated. Then he went on to say:
The sinking fund tax should be applied solely
to the purchase of ,onds. 1t is alleged that the
city collects s30OO00 annually and appropriates
it to the sinking fund. and that the fund has an
additional income of 100000. On January j,
1890, there was over Sl,000,000 lying in the city
act passed recurring that ordinances should be
passed for sinking funds and the money should
be used in the purchase of city bonds.
Power Given the City Controller.
In Pittsburg no attention was paid to this act
until 1888. when an ordinance was passed and
the Controller was authorized to make invest
ments under the direction of the Finance Com
mittee. The ordinance was passed for the par.
ticular purpose of allowing the Freehold Bank
to become city depository and it did becomea
city depository shortly after. The Controller
was then forbidden to purchase unless at an in
LoTeSG Oh per C6ul L Ills was lOT purpose
of allowing these banks the use of the money
for self gain, and that has been followed out.
This,fund increased at the rate of S250O00 per
year. and is being used for investments by
banks. The action on the part of the Finance
Committee was corrupt, and this the bill filed
tries to overcome. What is wanted are trustees
for the investment of the fund, and the court
has the right of jurisdiction in the matter.
Mr.. McCleaye here quoted a number of
cases as far back as 1876 to show that the
courts had the power. Continuing, he said
that there was nothing on the statutes that
could stop the citv of Pittsburg from put
ting its hand into this fund and using it for
any purpose. just as had been done before.
1t was the duty of the Court to remove un-
fit and incompetent trustees.
Time for the Court to Act.
Surely the law must not stand idly by
until the money is being wasted before
action is taken, and when it is clearly shown
that they are using the money for corrupt
practice and against the wishes of the tax
payers. The act of 1883 specifically states
that the money shall be used for the pur-
chase of bonds, and that the Controller shall
use it. not by the discretion of committee
composed partially of convicted criminals
and receivers of stolen goods. What the bill
asks is the safe keeping of this fund
and the restoration of what has
been lost BY mismanagement. AS to the
conspiracy on the part of the banks, that is
proved by the giving of the funds to the
banks for investment, instead of the city
getting the benefits. Their answer of having
no legal right because the bill is for the pur-
pose of harassing certain parties and cor
porations was an unlocked for confession
that some persons or corporations are being
benefited by the city's sinking funds, and is
additional reason for the appointment of
a commission.
After hearing Mr.. McCleave an adjourn
ment was made until O. clock this morning,
when d. T. Watson and City Attorney
Moreland will close the argument in behalf
Of the city.