The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1893-09-27
That Queer Bank loan.

For q brief while, the public were
stunned at the liberality of the banks
in lending the city $500. 900 without
interest to tide over the interval until
a bonding operation could be success
fully conducted. For a moment every
M was on the verge of blossoming
out into a fit of enthusiasm, and hold
ing up onr financial institutions and
municipal officers to all the world as
exemplars of generosity, prudence
and public spirit.
1t is apity that the transaction does
not bear close inspection better. We
would like to be enthusiastic over it.
But, as a matter of fact, its one of the
queerest deals we ever heard of. If it
is fairly explained by those mixed up
in it, we regret to say it is consum-
mately unfair and unjust and essen
TALLY illegal. In fact, it is nothing
o nor less than a temporary mis-
appropriation of the city's revenue at
the expense of all who hold claims
against the city treasury.
As clearly as WI can get the arrange
nsnt explained, it means this:-The
banks have $500. 600 or more of city
money on deposit in their Golfers, on
on which they pay. no interest. The
city needs the money to take up its
maturing bonds. The banks will
graeiouslY lend it $500, 900 of its own
money for the purpose and charge no
interest," But the city must bargain
to draw as little as possible from the
banks until the loan is repaid.
They may pay salaries and interest
charges, but all other claims are to be
hung up" for awhile. When the
5000 900 is repaid, then they will be
passed.
This is. obviously, an outrage on
the city's creditors. In order that the
municipality may borrow $500, 900
without interest, all TO whom it owes
money must lie out of their capital
or else must go right to the banks and
discount their claims. In other words.
they must pay the interest which the
city saves, and the banks come out
all right, making their usual per-
centage or the money involved.
What right has the city to borrow
money without paying interest for it,
You say::-"The money is its own. 1t
deposits it with the banks" We re-
ply: It is not its own for the purpose
OF paying these bonds. 1t is it's own
for the purposes for which it was set
aside in the budget before the tax levy
was declared for the current year.
It's wholly Improper to use 1t for any
other purpose. The city has resolved
to borrow money at interest to pay
the maturing bonds; il it cannot do
SO on new bonds just now, let it do SO
on temporary loans until the striH-
gency has. passed. The sum is not
enormous, and as it will be offset by
SO much debt cancelled. there should
beno difficulty in borrowing it with
out any unusual or embarrassing
Nl -
s~tipulations.
We have nodoubt the members of
the Finance Board had the best In
tentions In the world; but we believe
they erred in only looking at one side
OF the case. We think they will do
we'll to retreat from their present posi-
ton and borrow $500, 600 from the
banks upon the usual terms and at
the rate of interest usually paid by
the city. Thenthey can keep on pay
ing current liabilities as they fall due,
and there is no good reason why they
should net do 80.
PASTOR ScuDDER, doubtless with
out meaning 1t, made an unfair and
invidious distinction in his sermon on
early closing. last Sunday. From the
merchants, who adhere to the early
closing idea, he singled out Mr..
Charles s. Furst for special praise
and as an exemplar for others. We
have nc objection to M. Furst's re-
ceEving fuii credit for any good he
- 80. 80 -. ..--19xAH