Los Angeles herald., 1910-11-13
Attempts to Override Expected
Veto of AqueduCt Contract
Likely to Be Blocked
WAsHBURN DEFENDS ACTION
Finance Committee Chairman
Says Deal Was Best That
Could Be Arranged

Two cOuncllnleH dppedN " h@NO OSSN
converted to the views of Councilman
Martin f. Betkouski in his opposition
to the proposed new contract between
the city and the New York bond syn
dicate. They are Councilmen Whiffen
and O'Brien. If Mayor Alexander vetoes
the contract in it's present form, and ne
has strongly intimated he will, ana
Betkousli, Whiffen and O'Brien line up
against it, the council cannot pass 1t
over the mayors veto, as such action
would require seven votes.
The mayor and others opposed to the
contract object to several Of its terms
praincipally the one that practically
ties up the sinking fund until February
1 1914 The sinking fund has been
found most useful in times past, ana
there is some expectation of using II TO
float the power bonds
w. j. Washburn, chairman OF the
council's finance committee, declares
that the contract as presented to tne
council last Thursday is the best that
can be secured from the syndicate.
"The syndicate backs down inch by
inch reluctantly" said Washburn yes
terday. "I am convinced 1t has with
drawn opposition to the power ana
harbor bonds that caused us SO mucn
difficulty in securing money last sum-
mer. The syndicate has Withdrawn op-
position to the power bonds because 1t
has realized it had to. 1t has absolute
ly nothing to do with those bonds.
WANTS FUND AVAILABLE
"The advisory committee did not take
the tying UP of the sinking fund as Sc
riously as others appear to treat IL.
The syndicate wants the sinking funo
available for investment in aqueduct
fhnr Gh q
tight money market next April 1t would
only have actually to advance $2,400,OoO
and the 100000 that would then be IN
the sinking fund would take up tne
SS,oOO,00O of the option If the syndicate
should so elect.
gezS.srhe aqueduct situation is about as
follows:
"on July 81 last the council author
ized the sale of about $1,6O0.00O aque-
duct bonds to the bond syndicate ana
insurance companies, which renewed
the very pressing necessities or the oe-
partment and permitted the work 10 De
continued on a basis of $250,0OO
month. These bonds were sold at par.
In the public press and from every dl-
rection come urgent requests to sell
more. that the construction could be
increased and expenses reduced. IN
this the committee heartily concufrec,
and as the result of the negotiations
the SYnQlCdL6 Hd5 dSACC0 w NeAtNO
proximately two and a quarter MIL
lions more, to be taken from the last
end of the contract, the price to be the
same as before.
1.-THE aqueduct department is partic-
ularly desirous of additional funds that
the contract for siphon steel, amount
ing to 1900 or $4,000 tons, can be ne
gofiated at this time, and Mr.. Mulhol-
land stated before the council on
Wednesday last that it would save
from five to six months time In the
completion of the aqueduct.
WHAT CONTRACT PROVIDES
''Under the present contract the syn
dictate has the option on February l,
next to purchase $4,6S6,000 of bonds at
par and one-half of 1 per cent, to be
taken at the rate of $4,000 every sixty
days, and on February /, 1912, an op-
tion on the remainder about $3,35O,0OO,
at same rate of delivery, at l per cent
premium. There is no obligation on its
part to exercise either option or to ad-
vance money meanwhile. Under tne
proposed new agreement there Woulo
remain after the present purchase ap-
nroximately six millions of bonds un-
sold. upon which it is proposed to give
1t an option on $3,024,00o on April l, to
be taken at the rate of $4,000 each
month, and on October l an option on
the remainder, to be delivered at the
same rate. The syndicate TO nave the
right to take the bonds earlier In case
IL so desires, and in case 1t exercises
the option on the last lot on October
/. next. the city will invest the sinking
fund on hand at that time at par,
which should amount to about $640,O0O,
in aqueduct bonds and carry them for
IL If it so wishes for sixteen months
thereafter.
Los Angeles aqueduct AZ per cent
bonds at par under the present market
conditions is, in the judgment OF the
committee, fair price. Municipai
bonds of the large cities of the United
States have declined in price during
the last five years more than per cent,
and our bonds at par now Is mucn
better price than was received by the
city when the contract was made.
'The power and harbor bonds voted
a few months ago are now in the courts
to establish their validity. The syndi-
cate has not nor will it have any option
upon them. When they are ready for
sale they will be sold as the money Is
needed.
'@rhe advisory committee and the
aoueduct department have been entire
ly unanimous in the advisability or
making this contract, and they believe
that even if the price was a little too
low, which in their opinion it is not
ii would be better to make the conces-
sion than to defer the completion OF
the aqueduct five or six months, as Mr..
Mulholland says will be the case"
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