The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-01-08
IT PAYS WELL.
Topeka Firm Cleans Up a Neat
Sum on Stafford Bonds.
Commission Amounts to Over
Seventeen Thousand Dollars.
SOLD TO THE STATE.
Bulk Of Them Disposed of to
School Fund.
Bear a Rate of Four and a
Quarter Per Cent.
SOLD TO THE STATE.

There seems to be quite profit in
the bond brokerage business. Kelly &
Kelly of Topeka have just closed up a
$4,000 Stafford county deal. for which
they received s235 on each 81 600 re-
funded, which was made payable in
three annual installments with interest,
the total commission being about s19,-
600
This is little over 25 per cent on
the face value of the bonds refunded.
There has been a big fight raging in
stanford county about the deal, the
claim being made that the county
would be over $4,000 loser by dealing
with Kelly & Kelly on the terms pro-
posed.
However. it requires a good deal of
ability to put through a deal of this
kind. Among other things, the state
school fund commissioners had to be
persuaded to buy $65,0O0 worth of the
new bonds, which are issued to draw
"A per cent. At AZ per cent. the bonds
are decidedly low. But ever since the
city of Wichita through Mayor Find
ley Ross, got the school fund commits
sloners to buy its 4 per cent bonds, the
other people who have bonds to sell
nave better leverage on the school
Iund commissioners. It is an essential
part OF the bond refunding scheme as
handled by the brokers, that the new
bonds be issued at a low rate, and that
this low rate.
The old Stafford county bonds. issued
as railroad aid" to the amount of
$l25O00, bore s per cent interest, and
had eleven years to run. Kelly & Kelly
found that they could get hold of about
$4,000 worth of these old bonds. They
took one c. G. Webb into the deal with
them, and entered into a contract with
the stafford county commissioners to
cancel $4,000 worth of the old per
cent bonds, and sell for the county, in
their stead $4,000 worth of "A per cent
payable in annual installments of 81, 900.
The charge of this service was to be
$50 on each $1,000 refunded, or a total
of S17,625. This was made payable in
three annual instaIlments, the debt
drawing "A per cent the same as the
bonds. This would make a total Of
about s19,12S.
Kelly & Kelly figured it out with the
county commissioners that if the old
bonds should be allowed to run on at 6
per cent for eleven years, the county
would pay a total of S126, 500 to clean up
the matter, while if they should be re-
/ funded a the rate proposed and on the
terms proposed by Kelly & Kelly, the
| cost would be Sll6,0SIS5, thus showing
/ a saving to the county of $10,41215.
Some of the Stafford county people
got. to figuring on the thing after the
contract was made, however, and they
disagreed with the Kelly & Kelly fig
ures. They said that by creating a
]
s per cent bonds, and collecting current
rates of interest on the sinking fund,
the old issue could be cleared off for
! $112.531.
firm of Kelly & Kelly S19,123 the
county was practically robbing itself
! of interest on that sum of the
I equivalent of nine years, which would
bring that item up to $32,17O-50. The
direct cost of the discharge of the
/ bonds and interest would be $4,000,
making the total cost under the Kelly
& Kelly scheme $125,870, a loss to the
county of S13,339 over what it would
cost the county simply to keep its old
/ 8 per cent bonds.
OF course the county would not run
any risk of losing its sinking fund IN
/ der the Kelly & Kelly project and
! this advantage would no doubt be of
value to the county, but the opponents
/ of Kelly & Kelly thought that $4,000
/ was too high a price to pay for this
element of safety.
/ Kelly & Kelly found some outside
purchaser for a portion of the bonds,
4 but arranged to deliver to the school
i fund commissioners from $4,000 to
/ $65, 900 remaining
Lincoln Center Bonds Sold.
The Lincoln Center people have
/ closed a deal with the school fund
commissioners for the sale to the state
school fund of their $34,500 in water
works and electric light plant bonds
at 2 per cent.
For time the Lincoln Center dele
cation hung out for per cent on their
| bonds, the same as obtained by Wich-
tia. The school fund commissioners
| urged that Lincoln Center was not as
big as Wichita and should not expect
such a low rate. The Lincoln Center
| delegation contended that even if they
were not so big, they did not have one
! cent of bonded debt. and that $4,000
worth of their bonds were good as old
| wheat But the school fund people
insisted that 4 was the best they
| could do, and finally the Lincoln Cen
ter representatives accepted the terms
The school fund commissioners have
also purchased S26,417.80 worth ot
Leavenworth city internal improve
ment bonds. These bonds bear pei
cent. but this is the rate generally
lsecured for Improvement bonds, which
L.. IL