The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1893-09-26
.C|TY'S MONEY T|EDUP
Secret Agreement Between
the Finance Commission
ers and the Banks.
LATTER'S LIBERALITY EXPLAINED
Until the 100000 Loan Is Re.
paid. the City Will be
Limited as to Money 1t
Can Draw.
So Claims May be Hung Up for
Some Months TO Come.

The liberality OF the city's depositoriss
In loaning the Finance Commissioners
$500, 900. without interest, has aroused as
much comment as did the failure of tha
city to float $7OO. 900 worth of 5 p er cent.
assessment bonds. This failure placed
the Finance CommIss toner's In somewhat
OF dilemma for short time, and it
was found necessary to seek the aid of
the city's repositories, which are the
Second. Third and Hudson County Ma
tional Banks.
The Three institutions agreed, after =
conference held In Comptroller Hou0h's
office. TO advance the $3000e0. which was
absolutely necessary to meet maturing
bonds falling due October l, aud whicn
bear z per cent. To default in she
payment OF these meant that the city was
bankrupt. This the Finance Commits
sioners would not allow 20 occur.
SOME ARGUMENTS.
When the loan Of $300.000. without in.
terest. was accepted, one of the Finance
Commissioners argued, 1t Is said. that to
pursue such course was not right. on
the ground that it made the city obli-
gated to the respective institutions.
The others offset the argument by say
ing, well, the city has in thess thu co
banks about 5000, 900. which is not being
used by the city, and from which no
benefit is being desired. The banks on
the other hand are deriving some 'hsns-
titr
&The $500. 600 loan has been accepted and
the Finance Commissioners explain that
the banks have permitted them to take
money deposited to the credit of certain
accounts to meet an emergency in
another. Whether this course is legal
or not Is yet to be ascertained.
WRONG TO PAY INTEREST.
The Finance Commissioners also
wrong for them to pay interest to the
banks for the money because it Is already
the property of the city.
Comptroller Hough, iE will be remsms
bered. recently established precedent
| in direct opposition to this course.
| He claimed that the money Of one appro-
| priation could not be used to dsfray the
| debts Of another. This he set forth In
| the case OF the $50 600 worth of old claims
which stand as . lien against the special
| street mouies of 1891.
QUEER AGREEMENT.
| Not considering the legal aspect of the
case at all, there appears TO be niger
In the fence. W hen the 100000 loan
| was made the banks demanded. 1t Is said
| on good authority, that the city muss
repay the loan before drawing out any
| more money, except so far as the pay
1 IU6ub OL city 0luCIdlS SA1hEIGS Auu lubeEoSb
| Is concerned. The Finance Commission
| ers, 1t is said, pledged themselves not to
| draw upon the three banks for any more
| money than was absolutely necessary
| outside OF the two account made.
CLAIMS TO BE HUNG UP.
Claims against the city will, as result
of this pledge, probably be hung up until
The provisions of the agreement are
| fulfilled.
The Finance Commissioners In reso.
luton adopted at Yesterdays session,
| agreed to vote the proceeds of the first Of
the 100000 batch for sale sold TO the
| payment of this loan OF $500, ,000
Beside being secure in the repayment
| of the loans. the bauks have also put g
check upon the heavy drawing upon their
| institutions for claims, which is, of
course, money making transaction for
them.
| CLAIMANTS PAY THE FIDDLER.
The whole thing simmered down shows
that whereas the city pays no interest
for the loan. the creditors of the city,
whose claims will be hung up. are the
ones who will pay the interest. and
| very heavy rate at that.
Before the loan Is repaid, unless the
ciLy'S creditors are liberal fellows, there
are prospects that many law suits for the
recovery Of the claims will have TO be
defended.
The scheme to relieve the city's wants
| through the courtesy OF the city's de-
positories is not looked upon with the
| favor the Finance Commissioners pro
bably hoped for