The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1892-08-23

kfckotc 10 o., f7o,oVV. anu B6tuEo Is lOHoWe.
April /. 1898, per cent. $21. 900
July /. 1893, z $40 per cent. -...... 100000
Jan. %. 1894, 2 $40 per cent? 100, 800
July I, 1894. $40 per cent---....--. 100000
July j. 1895, $40 per cent--.. 100000
July j. ss5, z $40 per cent......-. 1000
Jan j, 500, z $40 per cent. 5000
Total. ,245, 500
The fact that these high-intersst- bearing
bonds of the city of Indianapolis mature
Ia such a short time Is the one thing that
makes a bond funding scheme at all practi-
cable. Had the bonds, in the aggregate,
five years vet to run the holders would
laugh at any overtures toward an exchange
for new four-per-cent. bonds, no matter
how long they were to run. unless the city
proposed TO pay ae mnch in premiums to
the bondholders as the difference In the in
terest would amount to.
Mr.. WoOllen first discovered his scheme
in January. 1890. AT that time he was
chairman of the finance committee of the
Council. He gave ntterance to his ideas
regarding the refunding of the city's bonds,
but he soon found that hs would meet with
strong and concerted opposition from menu
bers OF the Council. and, as he expresses it
himself not at that time having much
confidence in his own scheme he decided
to give it up for the time being. at least.
But he did not allow his su-
preme hobby to lapse into innocuous
desuetude and. said he TO a Journal re-
porter yesterday: 81 came to the con clu-
sion this summer that IL was good time to
undertake the fulhllment OF the scheme; to
ascertain IT IL were practicable. Reasons
that caused me to undertake it were the
fact that money was cheap. city securities
were in demand. and was advised by
local bankers to whom went that in view
of the near approach of the maturity of the
city's bonds If they were to be refund
cd at q lower rate of interest now was the
time to do it. But there were certain legal
matters that stood In the way, and unless
they could bee circumvented the scheme
might as well be given up. The main le-
gal obstruction was the existence of
Of law recurring that where new
bonds were issued their sale should
be advertised. That requirement is for
the purpose of bringing in competition.
and If followed out W onld, of course. knock
out q scheme that merely contemplated an
exchange of new bonds for the old ones.
the city and the holders of the old bonds
being the only parties to the transaction.
But there Is also another law. the city
charter. which gives the Council the power
to authorize f.he city controller to exchange
new bonds for the old ones. the transac-
ferred to only when its provisions are ap-
pllcable. l regarded that the provision
calling for an advertisement was not ap-
pllcabIe in tho scheme under contempla-
tion. but. of course. / desired to
Of the proper person. At that
time City Attorney Bailey was ont of
the city and 1t was not until O few days
ago that be rendered to ME all opinion in
which he-heli that an advertisement was
not necessary when newibOnds were merely
to be exchanged for the outstanding one 9.
'In the meantime, and prior to my con-
ferences with Mr. Bailey. l. had written to
various New York bankers AND brokers,
scheme and asking them to take hold of il.
You understand the biggest job will be col
lecting the bonds from the bondholders.
who are scattered all over the country.
Among others, wrote to Winslow. Lanier
q Co. In their reply they discour-
grounds pointed out in the Journal
the other dav; l. g. that the -bondholders
would not relinquish high-interest- bearing
short-time bonds for MISUNDERSTANDING
should amount to the difference in tho In
terest. That being the case of course it
would be useless TO try to refund the bonds.
as the city would gain nothing. i also.
however. wrote TO Francis NJ. BanfIl.
New York broker. whom l have known for
Twenty-Five years, and submitted the
scheme to him. He agreed to undertake
tho collection and exchange of the bonds.
so the other day when received the city
attorneys opinion / telegraphed Mr..
Banfiil TO come on to this city, as was
then in a position to talk to him. He ar
rived in the city last Tuesday. and has
been stopping at the Bates House.
had several interviews with him,
and bad him meet Mayor Sui
Ivan. City Attorney Bailey and
Councilman Rassmann, chairman of the
finance committee. After talking the mat
ter over. all of these gentlemen agreed that
my scheme was all right. Mr. Bantll then
submitted proposition TO me. the point to
of which are embodied in an ordinance
drawn up at noon to-day, which will be
introduced in the Council tomorrow
night. He agrees to collect all of the out
standing bonds of the city hearing more
than per cent. interest which. in the az
gregate. amount to 81, 245, 500, and exchange
them for new bonds maturing in thirty
years, drawing per cent. interest, the
ondholders in consideration for the ex-
change TO RECEIVE premiums. the maximum
limit OF which, In tho aggregate. ls s24,9lO.
These premiums are arranged In
schedule. SO that limit 10 fixed to the
amount OF the premium that can be paid to
any individual bondholder. For instance.
according TO the schedule. not more than
Sill in premiums can be paid to the hold
ers of the s2l COO maturing April J, 1898, nor
more than $1,000 to the holders of the $780,
Coz maturing Jnly /. 1873 You see, the
longer the bonds have TO run the greater
tho premium In proportion TO the amount.
ION the proposition made by Mr.. Bonfll
the funding of the bonds Will save the city
with him both the new and old bonds will
GO in at their par value. fhe only cost to
tho city IN refunding the bonds Will be the
ga go IN premiums, and whatever
consideration Mr.. Honill gets for
conducting the deal will have to come
ont of that amount. He also agrees to
gather In all the old bonds within six
months. otherwise the contract with the
city becomes invalid. All the new bonds
are TO be dated. July1, 1892. Mr.. Bontill ia
acting the agent Of the present bond
holders and claims that he knows where
all but q very few of the bonds now are.
The work OF preparing the new bonds will
be begun at once. if the Council favorably
acts upon the ordinance that will 60 before
1t tomorrow night, with my recommends
ton. As soon as l receive notice from the
city's New York bankers. Winslow. Lanier
IL Co., that Mr.. Bonfill has turned over to
them a $1,000 block of old bonds, shat
amount OF new four percent. bonds will De
forwarded by me. together with the amount
of the premium due. prorated according to
the time of maturity of the old bonds. OF
COURSE. If Mr.. Bonfill is only enabled to col
lect one-nalf the outstanding bonds the
city will be the gamer by abont 81, COO.
II have calculated continued Mr.. WOOL
len, THAT If tho scheme is succeasful the
city will realize n g.. per cent. premium on
81. e.. -. rt,s