The herald., 1897-06-17
OFFICE OF THE HERALD,
Los Angeles. June 1s, 1897.

Los Angeles. June is, 1872.
Several communications have been re-
ceived by this department asking for infor-
nation on the effect of the recent de-
cision of the Supreme Court. filed 2oth
ult., in the case of Murphy VS.. City of San
Luis Obspo as to the legality of bonds
issued under the act of March LIST. 1893.
This decision has been misunderstood in
some quarters, more than one flnancia,
journal having stated that the adverse
opinion of the court did not touch the gold
coin proposition, but was founded upon
the other technical points raised in the
suit.
The court, however, really decided that
the provision in the issue of the San Luis
Oblspo bonds that they were to be paya-
BILE sin gold coin of the United States"
was not In compliance with the act of 1898,
which requires that they shall be made
payable 'in gold coin of the United States
or In lawful money Of the United States"
The court says in its opinion: Argument
is made that because previous statutes
authorizing the issuance of bonds QSS9 and
1S9D were silent as to the kind of money
in which the bonds might be made paya-
BILE and there was no restriction in this
regard, therefore the amendment intro
ducing a restriction was intended to limit
the power and to compel the proper au-
thorities to insert the precise language of
the statute and all of it, and not having
done so the bonds were void"
+ + 4 f'.
The court then goes on to say: Respond
ent with much force and reason suggests
"that the plain grammatical and COM
mon sense construction is that the city
should choose between the two kinds Of
currency. 1t must adopt one or the other.
but the wisdom, as we'll as the expedency
and responsibility of the choice, was left
to the people themselves or their repre-
sentatives; that they might deem 1t more
advantageous to themselves, In seeking a
market for their bonds, to pay in gold, and
the legislature did not intend to deprive
them of this advantage or to substitute its
Judgment for theirs" This, 1t seems to me,
is as strong a view as 1t is possible to pre-
sent and covers concisely the whole argu-
ment. r,
But says the court this Is precisely
what the legislature did when 1t passed
the act in 1889 and later when it was
amended in 1891; the municipality was left
without restriction. If then the legisla-
ture so intended the law to remain, why
did 1t amend the act in this very partics
ular? We had the same kind of money in
1889 and 1891 as in 1S93 In fact all our
money was OF equal value, and no conceiv-
able motive occurring to my mind could
have actuated the legislature to introduce
this amendment, unless it was to- provide
against possibility that the time might
come when gold coin'' would have diff
ferent value from that of some other
'lawful money of the United States.'
tpn1 a,,I ss1ox ,f,,y e
United States were terms importing
money of equal, fixed and unchangeable
value, there would have been no occasion
for change In the law. But as this is not
true, l can see a motive in so providing
that the maker Of the bonds should al
ways have the option to pay in that
money declared by the United States to be
lawful money.
Applications have been filed for a re-
hearing, which may or may not be granted,
but the probability is that the decision
Will not be disturbed and the result is
that bonds issued under the act of 1898
which are not made payable in the man.
ner prescribed by that statute are yoida-
BILE. although 1t is not to be supposed for a
moment that a municipality having any
regard for its credit would take advantage
of such a technicality. Until, however
use.
less to attempt the issue of any more bonds
unless the Supreme Court should change
its ruling. No purchasers could be found
at any fair price for bonds which might
be paid in lawful money for which the
purchaser would be required to pay in
gold.
This decision does not affect the recent
issue of funding bonds sold by the city.
as they were authorized under special act
applying to refunderS only.
Bradstreets compilation Of bank
clearings for May in the United States
shows total Of $4,159, 7S1, 1863. This is the
smallest total for any May since 1884, and
previously since 1885, OF course 1t is un-
satisfactory, though up to the monthly
average Of the current calendar year. For
the first five months these clearings COM
pare as follows:
1877 ......"...........".... 5SI, ,091 996
1886 q, ,29S, ,6y7 2S9
1880 ........................ 20 S93, PSI 515
1884 ..................".. IS SIG, 203 $50
The total this year is 3.3 per cent less
than for 1896 and IA per cent less than for
1885, but is 10 per cent larger than for 1894.
The heaviest decrease is in the north
western group of Is cities, including Chi
cago. The aggregate clearings in that
group show decrease Of over 12 per cent.
The leading banks of Europe reported
specie on hand on the Sd inst. as follows: -
Bank OF England .................$ 1S0,lSO 900
Bank Of France. 643, ,62O, 900
Bank of rmany................ 229, $40 900
Austro-Hungary Bank.......... 234, ,546 900
Bank OF Netherlands......... 47,9S1, 900
10 ~ A1rrttr