The record-union., 1895-06-04
SHALL WE REFUND TEE CITY DEBT !?
Mayor Steinman Explains His Views
on the Subject.
He Proposes a New Plan to the City
Trustees, and Tells Why BE
Favors 1t.

At last nights session OF the City BOARD
of Trustees Mayor Steinman sent in
message on the subject of refunding the
city debt. Says the Mayor:
To the Board of Trustees. Some time
ago l undertook to see what could be
done toward refunding the city debt and
lowering the present rate of taxation.
As financial proposition, we are forced
to decide whether it is better to go on at
the present rate and wipe out the bonded
indebtedness in about four years from
now, or proceed at once to refund the
present Indebtedness by extending the
time of payment at o reduced and con-
stantly decreasing rate for q period of
forty years.
have given due attention to the argu-
ment that in all probability the sum OF
$409. 200 represented by past due bonds
does not Gear interest, and that to refund
these bonds at say per cent would be to
add burden OF 5000 per annum in in
terest for the time that under present con-
ditions 1t would take US to pay Oft this
debt. But, considering the matter In all
its aspects, l early came to the conclusion
that the interests of the city would be
best subserved by refanding, and that
the removal OF the present heavy tax rate,
and the increased prosperity OF the city
that would result from this course, would
soon place us in suoh position that we
would practically not feel the burden OF
the debt at all.
We are, however, in this condition.:
We have S204, 200 Of Indebtedness repre-
scented by the bonds of 1898 and 1903. and
we cannot take these up without the con-
sent of the holders. / have had several
interviews with the bondholders with the
object Of seeing on what terms they
would surrender these bonds not yet due.
found that they were using these bonds
as club over US to compel us to pay in
terest on past due bonds. This interest
now amounts to the sum OF Sl36, QUO, and
they practically ask us TO give them this
sum, or such part thereof as they will
accept as present or bonus for deliver
ing UP their bonds not yet due.
When / had received letters from them
SO that their proposition became de-
tinitely settled, 1 called the board to-
gether to consider the proposition, and
placed the information in my hands at
your disposal. AT that meeting l stated
that l was heartily in favor Of refunding
the city debt but was emphatically OPP
posed TO paying any bonus to the bond
holders or TO giving them anything more
than they were legally entitled to.
For the purpose of bringing my views
to your attention again, wish to say that
l believe that the proper course for the
city to pursue is to provide for the issu-
ance of bonds at the amount of our pres
ent bonded indebtedness, which now
amounts to S643, 900, running forty years
at per cent. per annum, payable semi
annually at the Treasurer's office In this
city, or at some bank in New York.
These bonds we should offer to the pres
ent holders in place of the bonds now
held by them. The past due bonds will
take care of themselves.
II we offer the bondholders per cent.
bonds they can either take them or, if
they refuse to do SO, they can be sold for
their face value if the present outstand-
ing bonds are placed in some depository,
and the money realized from the sale can
be paid to the present bondholders; or, If
the bonds should not be sold 1t will not
be the city's loss, as the moment the re-
funding bonds are issued 1t seems to me
all question of interest on past due bonds
is avoided.
If we should be prevented. from dispos-
ing OF the refunding bonds by the failure
of the present bondholders to place their
bonds on deposit, no matter what the
final decision Of the courts may be upon
the question as to whether or not past
due bonds bear interest after maturity,
the fact that we are able to take up these
outstanding bonds by delivering new
ones or selling them and paying cash,
would, in my opinion, stop interest.
While the refunding of the city indebt-
edness would be, in my judgment, OF
great advantage to the city, its accom-
plishment is not the easy matter 1t looks.
We have over 500, 900 of a debt in bonds
not vet due and these bonds need not be
surrendered without the holders con-
sent, and probably will not be surren-
dered at ALL Under the Act of 1858 the
city is under a contract to set apart 90 per
cent. Of it's revenues for an interest and
sinking fund, and the city can be COM
PEELED TO perform this duty by the courts,
and once in our history has been COM
PEELED to do SO by mandamus.
This will prove to be the great stum-
bling block in our efforts to refund. II we
have to keep on putting 90 per cent. OF
our revenues into the interest and sink
ing fund, and also provide for interest
and retiring one-fortieth of the refunding
bonds each year, we will be In a worse
position than we are now. l have given
this matter earnest thought, and have
come to the conclusion that we can get
over the difficulty in this way:
The Funded Debt Commission now
holds in bonds of the city the sum of
1922, 500, of which the sum of S1S6, 800 is
represented by bonds of 1883; Sl96, 500 by
bonds of 1898; $685., 700 by bonds of 1898,
and S273, 400 by bonds of 1903 Let the
commission cancel all of its 1883 aud 1893
bonds, and also all of its 1898 bonds ex-
cept $124, 800, and all of its 1903 bonds ex-
cept SIS, 900, and then let the commission
refund these 1895 and 1903 bonds still to
be held by it. They could hold these
bonds until the 1898 and 1903 bonds held