The morning news. [volume] (Savannah, Ga.) 1887-1900, 1899-02-26
PAY ONLY PAR AND INTEREST.
DIR. FALLIGANT THINKS COUNCIL
SHOULD STUDY BONDED DEBT.


THAT Bonds Shall BE Bought "At
Ruling Market Rates." However.
Alderman Haas Says the city Is
Obligated TO Redeem Its Bonds
Every Year, and That the Resig-
nation of sinking Fund Commits
sioners Could Not Prevent 1t.
The question whether the sinking fund
commission is bound TO pay the market
premium on city bonds, as they are re-
deemed In accordance with the contract
TO retire a certain amount of the bonds
every year. is believed by DR.. l. A. FALL
giant TO be a question for the consideration
of the City Council, now that the board
is directing attention to the reduction OF
expenses. He believes the stopping of the
sinking fund purchases viii relieve the
city of an immediate taxation OF $4,000
The contract under which the city ex-
changed it's bonds provides that certain
amount shall be set aside by Council each
year from the city's most reliable re-
sources, for the purchase of outstanding
bonds The first fifteen years since the
exchange having expired, the city is now
setting aside $4,000 a year for the redemp-
ton N bonds. The contract provides that
this sum shall be applied to the purchase
of outstanding bonds lat the ruling mar
ket rate" While there are some who
claim that the city could have made
better contract, it is admitted that the
spirit TO reach for legal technlcalities to
avoid paying the premium would be dis
nstrous to the citys credit let the pre-
MUM go up" said one man yesterday.
1.-The higher 1t gets the better
for the cty's credit"
DR.. Fanigant has given his views in the
Morning News on the payment of prem
iums by the city, and claims there is no
legal or moral obligation for doing so. He
thinks the sinking fund commission could
be enjoined from paying more than the
par value and interest. and says the clause
in the ordinance that the bonds be bought
Eat ruling market rates" is trick OF the
financiers.
my position in relation to the obliga-
tons on the taxpayers of Savannah 10
the holders of thu city bonds as a very
clear and upright ONE said DR.. Falllgant
yesterday. 1.-The bonded debt of the city
Is about SO, 800 900, which the people of Sa-
vannah are obligated to pay at par with
s DER cent. interest and which they are
no, obligated to pay at par with per cent.
Interest and a premium on the face or
par value of the bonds besides No such
agreement was ever entered into or con-
templated: and the payments of premiums
over and above the face obligation of the
bonds heretofore made by the sinking fund
commissioners have been Illegal, In viola
tion of any just obligation of the city OF
Savannah TO her bondholders, and weak
lneed submission to the unlawful demands
of the bondholders. What the city, as
corporation, owes is the face obligation
of the bond with per cent. interest an
nually in addition. What the city as
corporation does not owe Is any premium
over the par value of the bond.
what then are we going to dor ne
asked 1.-THE answer Is a very simple one
precisely what the obligation calls for:
Ofrer TO pay the number of thousands of
dollars annually called for by the con-
tract, at par, with per cent. interest
II the creditors or bondholders decline
this on the grounds that the bonds have
higher market value than par, let them
keep the bonds until they are willing to
perform their part of the contract by let
ting the city have them at par and in
terest 1 am perfectly aware that IL the
city refuses to pay any more than par
and interest, the effect win be to stop
the work of the sinking fund commission,
in so far as buying the bonds at pre-
mium' but as we do not owe this pre-
MUM and are under no legal, financial or
moral obligation to pay any premium, ]
do not see where any harm could come
TO the city because of its refusal to pay
what she does not owe.
CAS- the premium is rapidly approaching
Is per cent" he continued, ut win be cas-
lily seen and figured that if we do not
take firm stand against these unlawful
elyactions of the bondholders, submitted
10 by the sinking fund commissioners, we
viii be required TO pay 100000 more than
we owe; and the bondholders need only
combine together, put up the price of their
bonds and make their extortion as great
as they please, unless we pursue the
course l have indicated, the legality and
soundness Of which course can be readily
determined by the city, or a body of tax
payers asking from the courts a restrain
ing order, preventing the sinking fund
commissioners from paying over par and
interest for the amount of bonds which we
are obligated to take up annually.
There are many thoughts in this con-
necton which suggest themselves" DR..
Falligant continued, ''but which will nat
urally follow hereafter The prime one Is
that the stoppage of the sinking fund
purchases will relieve us of an immediate
taxation of nearly $4,000 a year. Postpone
the further payment of the bonded debt
until it is due-at which time the bond
holders will be compelled to surrender the
bonds at par and interest without any
premium, and we will then be able to re-
place the outstanding bonds with new
ones drawing not more than to SIb per
cent interest. The sinking fund, as now
managed, is a fraud upon the Taxpayers
every dollar of premium on bonds paid by
them being a dollar not owed by the tax
payers, and not required to be paid by the
contract.
"These views do not in any manner sug
gest that the city bonds should have no
market value beyond par and Interest"
he said, but this market value should
and will be determined solely by their
commercial rating by reason of their rate
OF interest, and the length of time they
have to run-and not by any calculation
that the city can be compelled to buy them
in at any premium above par and inter
est
A number of aldermen were seen In re-
-arA 10 mr. TraliiVap's views hnt H.. -