Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-04-24
DISTRICT SINKING FUND.
Treasurer Morgan md the Proposed
Sewer Bond Issue.

United States Treasurer Morgan has ex-
pressed his views in an official letter on
certain provisions of Senate bill No. 2S,
which is known as the sewer Improvement
bill. He suggests two amendments, so as
to make the sections relative to the issue of
the proposed three per cent bonds clear and
explicit.
The only difference in the two provfs-
ions,' he states, ''is in the manner of CIV
ing notice to the holders Of the bonds call
ed No. 1 provides for giving notice by
public advertisement; No. provides for
sending a circular notice to the holders of
the bonds called. The opinion seems to
prevail that a formal advertisement is Of
doubtful utility in matters of this char
acter, and notice mailed to the holder of
bonds to be called is sufficient. This mode
also commenGs itself for its simplicity, as
well on the score of economy.
THE bill, also provides" he adds for
creating sinking fund for the gradual re-
dempton or payment Of the principal of the
bonds at maturity, and provides for calling
any of the bonds after twenty-five wears
from the first day of January, 1896, which
would be in 1921. An examination of the
debt statement of the District shows that
besides the $50 per cent bonds there are
but little over S5,0o0,000 of bonds of the Dis
trict outstanding. The sinking fund Gre
ated for the redemption Of 3.65 per cent
bonds provides that these bonds shall not
be purchased at more than their par value
They now command a premium in the mar
ket from to 10 per cent therefore none
can bs purchased for the sinking fund
Congress, however, by subsequent legisla-
ton, provided that the sums set apart for
the sinking fund for these bonds could be
invested II sny other bonds of the Dis
trict
The several sinking funds of 1896 aggre-
gate nearly 100000, and Will increase from
year to year to the amount of interest pay
able on the bonds retired therefor, hence in
few years all of the bonds of the District
except the 80 per cent bonds, will be retir
ed and thereafter the sinking funds can
only be invested in .5.6J per cent bonds and
II they cannot be purchased at par, author
ity will have 10 be given to pay the neces-
sary premium in the market, or provisions
be made to purchase some other securities
With the sums accumulated in the sinking
funds.
IF this bill becomes a law and a sinking
fund is provided for retiring the bonds. the
present sinking fund will be increased by
the amount of said funds and it will hasten
the retirement of the bonds now outstand-
ing, and before the twenty-five wears nro-
vided in the bill expire there will be no
bonds of the District in which to invest
except the ) per cent bonds, and they could
only be purchased in the market
In view of the fact set forth above it
seems advisable to reduce the period in
which the conds are made redeemable, and
l have accordingly inserted ten instead of
twenty-five years.
'1f an option of ten or fifteen years is
adopted, before the expiration of that time
the 1865 per cent bonds could probably be
purchased at a rate that would yield TO
the sinking fund at least per cent per an
mum, which would probably be the rate of
increase estimated for the sinking fund for
the contemplated loan"