New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-08-23

Sinking Fund Commission Decides
TO Offer Them at ! IL.


-sxt instaluneni of bonds offered at public sale.
7, a statement issued after the action was
,sl,en Mayor Mcclellan said that the action
mas not 10 be considered a precedent. and ne
added that he would ask the Legislature for au-
-borirv 10 issue short term bonds in cases OF
emergency, with a provisios that they would
he redeemed at a lower rate Of interest at the
option of the city, when normal conditions re-
turned.
II is understood that Acting Controller Nc
cooev will begin advertising either tomorrow
or early next week an issue OF at least sl5ooo-
600 of AZ per cent bonds. The great projects
under way will require even more than this
600 before the end of the year
William e Willis. the Mayors executive sec
Rotary. yesterday sent the following special mes
sage TO the heads of departments
The Mayor directs me to request that until
such time as the finances of the city return to
your department the lowest possible point
consistent with efficient administration
You win enter into no new contracts saw
such as are absolutely necessary, and VIII olS-
continue all work now in progress which can
be stopped without injury 10 the citys interests
This does not apply TO work school buildings
nor 10 contracts on which large numbers OF men
are employed
The Mayors letter to the various heads of de-
rartrnents follows:
For the last three uays 1 have done all in
NV power 10 help the Acting Controller sell
ner cent bonds find that in the present con-
dition Of the market there no purchasers
for city As at par. except city contractors,
forced 20 take bonds in settlement OF their
claims L is unfair TO compel them TO take
bonds al par and resell them at discount.
/ have taken the best financial advice Obtain
able and have reached the conclusion that,
while there is no market for city As at the
present time, will have no difficulty in Dor
rowing money at AZ per cent It Is absolutely
necessary for the credit and good name OF the
CITY TO pay its obligations promptly and in full.
The necessity CT issuing long term AZ per
cant bonds is due 70 the fact that the city has
not the authority. OF practically ali other cor
pora1ions. Of issuing short period bonds TO cover
tine of money stTingency. 1t is not the in
fen-ion Of the city TO esta blish this the rate
10 be generally offered. but merely TO sell suf
fcient bonds to obtain money now absolutely
required
In order 20 guard against repetition Of the
present situation intend TO ask the Legislature
q authorize the city to- Issue form Of In
sehtedness for q short period end at a rate Of
interest conforming with market conditions. 1t
IS proposed to issue these short time certificates
,1rzer conditions which will enable the civ 10
redeem theTn whenever IL IS possible to sell fifty
year bonds On favorable terms. The certificates
Wi be redeemed out Of the proceeds Of the fifty
vear bonds. the life II which will be reduced by
the life OF TIE short time certificates Thus, If
e certificate were outstanding for a year. It
would os replaced by q forty-Eine-year bond.
ard a tvo or three year certificate by forty
sght-vea- or forty-seven-year bond. The sink
ing fund instalraent required for the redemption
Of a ffty-year bond Is approximately I per cent
per arru-u. Such sinking fund charge should
therefore be raised by taxation On account Of
snv short time certificates. This plan removes
The criticism against the issue of short time
bonds heretofore made account IF there be-
ing fair method OF collecting sinking fund in
stal-aents eoT the redemption OF such bonds.
As an Illustration. suppose the City Of New
York were 10 Issue a certificate Of one year at
6 per cent, to be replaced and redeemed by n
New York City bond issued for a period of
for1v-nine years at per cent The additional
z per cent interest paid for the oae-year certf1-
cate would make the average rate Of interest for
h. FgI1- NJ IA ha
ing 20 the city by this method. in place OF re-
sorting TO the sale of high priced bonds in
period Of money stringency, is, therefore, appar
ent
Acting Controller McCooey says that the rails
ing Of the interest rate does not indicate that
the clty's credit Is at all impaired. He believes
that the present market conditions not
local
The action Of the Sinking Fund Commission
to-day" said Mr.. McCooey, does not indicate
that the system Of disposing Of bonds at private
sale has proved q failure. II has been under
the test only since August II, and this in
market which has been unparalleled On years.
The experience gathered in disposing of
100000 bonds at private sale leads me to be-
leve that under less depressing conditions this
system Of marketing the securities Of the city
VII prove very effective. The market seems TO
be so depressed at the present moment, how
ever. that II does not seem wise to experiment
further al this time because various city works
have been performed in good faith and in a sat
fsfactory manner. and the creditors entitled
10 their pay. They are dependent upon such
payments 10 meet obligations to the workmen.
who have also labored in good faith and earned
their wages. II the city cannot dispose Of per
cent bonds TO meet Immediate demands. the
question becomes industrial well as financial.
Inc welfare of The workingmen whose pay
comes indirectly from the city must be consid-
cred. With this feature of the problem in view
il seems better that the city should temporarily
Increase the rate OF interest on bonds TO tide
over the present shan to expose thousands OF
workingmen TO the hardsllps attendant upon
irregular wages OF possible suspension from
work"
The move yesterday morning Is the first in
raising the rate of Interest on city bonds since
April OF 1905. when the rate became per cent.
From 1900 20 that month in 1905 the rate was
81. except on s3,125.O00 bonds sold in January.
1901. at per oenC
Raising the ratSAof interest began to be
broached by the Controller after the failure OF
the bond sale Of July ., when S29eo00O0 was
offered at per cent. Only 100000 was sold.
The Controller had obtained legislation permit
tirg the Sinking Fund 20 raise the rate. but he
declined 10 do so for that issue. saying he
sure the market was In good enough condition
20 get rid Of S23000000 at + per cent. L was
not. Legislation was also obtained permitting
the Controller to sell -'over the counter" mean
ing at private sale, all the bonds .eft unsold
from any public offering. The first Issue after
that bill signed by the Governor was the
Offering OF sIJ.o0o.o0D a week ago Monday, or
August u. Only s2.Tl3.4S5 worth of the lot
VAS bid for
The action of the Sinking Fund Commission