The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-02-06
MARKET FOR BONDS|
No Difficulty in Finding One for
Further School Issue.
ARE BONDS LEGAL7 THE QUERY
Some Questions That May he Raised
= Answered by Wallace
G.. Nye.

II the people of Minneapolis, either by
direct vote on the proposition themselves,
or through the medium of the city council
and the legislature, deem it advisable to
issue bonds for school construction, from
the standpoint of the bond buyer there is
no objection that can reasonably be made.
such at least is the opinion of w. G. Nye,
former city controller and himself a large
dealer in municipal bonds.
The statement has been made that pres
ent holders Of city bonds would look
askance at any proposition to add to the
c1ty's present bonded debt inasmuch as 1t
exceeds the five per cent limit, as they
bought Minneapolis bonds on the UNDER
standing that the five per cent debt limit
was not to be exceeded, and as further
additions to the bonded debt would have
a tendency to lower the value Of their
holdings in the market.
There is absolutely no ground for any
such sentiment, declares Mr.. Nye. He
says:
If it is necessary to issue bonds for school
or any other purposes in Minneapolis, holders
of the present city bonds am positive, will
make objection. All that bond buyers will
ask is: Are the bonds legal, and is the city's
credit such that the bonds can be sold to
advantage? Just as long as Minneapolis con-
fines itself to issuing bonds that are unques-
tionably legal, there will be no trouble in
disposing OF them. and holders of present
In Massachusetts and most Of the other New
England states, the laws require that savings
banks shall not buy bonds issued by cities
in excess Of 5 per cent debt limit. But the
bonds outstanding against the water depart
Tnent of municipality, for instance, are not,
under the laws Of those states, regarded as
part of the bonded debt Under this law,
Minneapolis bonded debt is still below the
s per cent limit, and until that point is
reached, our bonds will continue to be bought
by New England savings banks-the best
market in this country for municipal bonds.
For the sake of gaining a year in time, I
should think there was wisdom in the scheme
OF asking the legislature for authority to
issue the school bonds desired So far as
the bond-buyers are concerned, it makes no
difference whether the bonds are authorized in
this manner, or by vote Of the people next
fall, so long as they are legally issued.
The total bonded debt of Minneapolis on
Dec. 81. 1901, was $8,561 900. But Of this
amount $311 900 was for the courthouse
and city hall and the payment of the same
is provided for by special tax levy, so
the sinking fund commission does not re-
gard them as properly a part of the
bonded debt. The sinking fund is $1,S77, 100
and the water department bonds amount
to $1,745,000 Deducting these two
have $4,939, 900 as the net bonded debt of
the city, with the courthouse and city hall
bonds included. Excluding these latter
bonds as part of the debt the net debt
would be but $4.62S000. The former fig
ure, however. would presumably be re-
garded by the laws Of the New England
states as the actual net debt The five
per cent debt limit is now $5,11O,O0O, leav-
ing a balance of $171,00O yet applicable for
an issue of bonds salable to New England
savings banks. Under the Z per cent debt
limit law of New York state, counting
everything in the shape Of bond as part
of the debt and deducting only the sinking
fund, there remains balance of $456, 900
for which bond market could be found
among the New York savings banks.