The herald., 1895-05-11
An Unforeseen Hitch Breaks
Off All Negotiations
THE CAT IS OUT OF THE BAG
Why Daily Council Meetings Were Held
All the Week
The Last Legislature Passed Law Which
Robs Los Angeles Of Twenty
Thousand Dollars and
Worse

o clock yesterday afternoon. when he in
formed the councilmen there assembled
that the $40, 900 cash premium picked up
by the city in the sale to Street, Wykes "
20, of New York of the 1896, 900 refunding
bonds voted asst month, had undoubtedly
been kst Not only that, but the bonds
while ultimately in no danger OF not
finding a market. will probably not really
be sold for some little time to come.
There has been an air of anxiety about
that portion of the city hall where the
council cham Der, the offices of the mayor
and city attorney are located. for several
days. Nobody knew Just exactly why
daily sessions of the council were being
held. The cat came out of the bag when
the city attorney yesterday read to til C
open-mouthed counclmen the following
very peculiar law:
An act approved March u. 1895, amend
ing section of an act relating to the
sale of refunding bonds approved March
/, 1893.
Section /. That whenever any incorpo-
rated city or town other than cities Of
the first-class in this state has an out
standing Indebtedness evidenced by the
principal OF bonds. the common council.
board of trustees, or other governing
body thereof. is empowered by Il vote OF
four-fifths of its number to refund the
same and issue the bonds of such city or
town therefor, provided that no in
debtedncss shall be refunded at "a higher
rate of interest than the original indebted
ness bore. Such bonds shall be of the
character known as serials" not less
than ono forteth of the principal being
due on all sums unpaid. Such bonds
may he issued in denominations MOI to
exceed one thousand dollars and not less
than one hundred dollars. principal and
interest payable in either gold coin or
other lawful money of the United States
as may be expressed in said bonds either
at the Office of the treasurer of said city
or town. or at the bank designated in said
hond, situated in the city of San Fran
cisco, New York, Boston or Chicago.
Interest on said bonds shall not exceed 6
per cent per annum payable annually or
semi-annually. as may be expressed in SAID
bonds. Said bonds shall not be disposed
OF in any manner except in exchange for
outstanding bonds for the refunding Of
which they are authorized to be issued,
provided that if any holder of such out
standing bonds refuses to exchange any
bonds held by him for such refunding
bonds but will deposit such outstanding
bonds held by him with any RESPONSE BILE
depositary subject to redemption, in
money. a sufficient number Of refunding
bonds may be sold in the manner pro-
vlded by such city council or other gov
crning body to the highest bidder for moi
less than the face value thereof.
The most remarkable thing about the
above amendment to the old law upon
the same subject, is that no election by
the people fol, the puprose, of issuing re-
funding bonds is required. The action
of fifths of the counciImen in the
premises is all that is required. Another
popularity about the new law is that it's
provisions went into effect on April q,
while the funding bonds were advertised
to be sold two days before, on April %.
which looks upon its face as if the law
might have been introduced for the ex-
press purposeof plishing Just exactly
what has been accomplished. The
amended act went into effect Immediately
upon its passage and approval by the
governor.
The council adjourned as soon as the
members had recovered from the stupor
into which the intelligence of the city
attorney had thrown them. until o'clock
this afternoon, by which time a solution
has fallen may have been found.
City Attorney Dunn, in speaking Of the
matter yesterday to reporter for Yhe
Herald. made this official statement:
''On the 9th day of March, 1895. the
governor approved bill which took effect
Immediately. amending section one of
the refunding bond act. Our refunding
bonds had been voted by the people, said
Mr.. Dunn, 'before that time. and on the
25th day of March, two days before the
act printed above became law. the city
council instructed the city clerk to ad-
vertise for bids for the refunding bonds.
This action was taken, ana as far as the
public knows very advantageous bid
vas received from Street, ,Wykes g. Co. for
the bonds at a premium netting the city
something over $40. 00J. AS soon as the
laws passed by the late legislature were
published by the firm of Palm g. Co. in
this city 1 examined them and discovered
the act above mentioned. | have kept
this discovery from the public hoping
tnat, the act being of so recent date and
OF doubtful constitutlonality. eastern at
torneys might pass the matter. The dis
patches received by us indicate. however.
that the attorneys for Street, Wykes &
Co. refused to sustain the legality of the
sale. and the time has therefore come
when the public should know the full
status of the matter. 1t is certainly a
very unfortunate thing that city in re
funding an outstanding Indebtedness
should he compelled by the legislature to
tender its bonds to holders OF old bonds at
par when the new bonds are really worth
more than par. These old bonds are pay
able at their face value, and accumulated
interest in gold coin of the United States.
and it certainly seems unjust that the
city should be compelled to pay them in
other bonds which may according to the
condition of the financial market, be
worth more than the coin represented by
their face value.
THE act referred to seems to have EN-.
anated from some northern statesman.
and while it has resulted disastrously for
us it is not strange that our members in
II sixty days session. with 1000 bills to
consider, should have overlooked this
measure. II is orly another example OF
the pernicious results of short and ,infre-
quent sessions of the legislature. practic-
ally prohibiting proper consideration
of the bills that come before it. | am not
prepared to say certainly what the ulti-
mate result of this matter will be. but
fear that we have lost the financial adj
vantages VIC had hoped to gain by the
sale to Street, Wykes e. Co.
This act does not in any manner
affect the school. Jail or headwork ponds !;
they were issued under the municipal i'm
provement bond act. which is not affected
by this amendment.
Seventy six thousand dollars of the old
bonds became due on May 1st. All of the
issue of the old bonds are believed to be
held in California.
81. Halt.