The Washington times., 1901-09-01
KANSAS BONDS REFUNDED.
The State Now BEING Closely Cover
ed by Eastern Investors.

| TOPEKA, Kan, Aug. 3l.-The bond
| firms are finding business very dull just
now in this State. Two years ago when
| there became optional a large number of
bond issues made during the railroad
| building days, the demand for refunding
propositions was constant a. first, the
| rates We're as high as 5 pei cent. but
| when the good crops made the counties
| and municipalities prosperous. this was
reduced to per cent, and even lower. by
| competition among the many firms that
| were represented by agents in the field.
Since that time the State has been can
yassed closely, both by agents from the
East and by local firms handling bonds
on commission, until there is hardly an
| optional township issue that has not been
refunded.
About the only opportunity now for
bond investment comes from the occa-
sional issue that becomes through lapse
of time optional, OF In new issues. Sever
al new issues were made early in the
year. but the dry weather has caused
hesitancy that has made the people re-
fuse to indulge in bond-voting. A law
was passed last winter allowing counties
to refund certain bonds with the attach
ed coupons" but this opened so wide
field for the increase of Indebtedness that
the Supreme Court declared it unconsti-
tutional. and put stop to the Issue of
many new series which were projected.
The State school fund. which holds
about 100000 of Kansas bonds, is the
loser by about 100000 from investment
in western Kansas bonds taken during the
boom days. Issues were made then that
were not warranted by the development
of the country. They were for every pos
sible purpose. from the building of a
sugar mil where there was no cane to
the erection of water-power plants where
there was no water. The counties lost
population and wealth and defaulted in
their bonds At the present time. the
fund contains 10000 in bonds from those
sections which are in default. OF these
some will be paid when the counties are
able. Fully one-third, according to the
Investigations of the State Auditor, will
never be paid. While the Eastern hold
ers, losers to yet greater degree, may
compromise on their bonds. the State has
no such provision, as the constitution says
that the school fund shall not be dlmin-
ished. 1t Is probable that there will be
some provision for changing this to al
low of Il revision Of the securities. The
amount in default has been reduced in
the last two years about 100000, and
many counties are willing 20 compromise,
if there is opportunity.
The method by which conn romises are
accomplished is to release the old bonds
and take from the counties new issues at
a reduced rate of interest, and for an
amount that the property valuation in
dicates can be met. In some instances,
with western, Kansas towns, the principal
has been reduced one-half, and the in
terest rate cut from per cent to ). Then
the bonds become worth their face value
and will be paid.
The existence of the school fund has
been Of great benefit to the State, in that
it has furnished the municipalities a ready
market for bonds at the lowest possible
rate The bond-aealers have had TO com
pete with the State. which stood ready
with the cash to take any good issue that
was offered. The rate has been kept so
low by this means that combines or the
forcing of high rates was impossible. In
this way the fund has saved the State a
large sum, and has also made it imposs-
bic for dishonest officials to speculate in
the bond issues. all the States transac-
tiuns being of public record.