Los Angeles herald., 1910-07-06
BOARD IS NAMED
To AID SALE Of
AQUEDUCT BONDS
Bankers to Assist City in Keeping
Work Going at Top
Speed
TO TRY TO FINANCE PROBLEM
Anxious to Reach Agreement with
Syndicate Which Holds
Option on Issue

An early solution of the financial
problems which have arisen in connec-
ton with the building of the aqueduct
is expected as the result of the APP
pointment yesterday of an advisory
committee to work with the finance
committee of the council and the aque-
duct commission in planning way to
get the money needed to carry on the
work on an extensive scale.
The advisory committee consits of w.
B. Mathews, counsel for the aqueduct;
Major Henry L. Lee of the Los Angeles
water commission; Stoddard Jess, vice
president of che First National bank;
]. e. Fishburn, president of the Nation
al bank of California, and ]. o. Keep
I'll q business man.
sYNDICATE's REFUSAL
The problems which this committee,
working with the city council and the
aqueduct board, will try to solve, are
those growing out of the attitude of
the bond syndicates which hold an
option on the aqueduct bond issue.
Under the terms OF their contract with
the city they should make a bi-month-
ly payment accou..t of their bond pur-
chase on July 81, amounting to $S16,-
900. This they have indicated they will
not do, claiming that they have taken
more than $2,000,000 worth of aqueduct
bonds already in excess of the re-
quired purchase at contract periods.
Recently the city council, on the ad-
vice of City Attorney Hewitt, notified
the syndicates to make the contract
payment Of $4,000 due July 81. The
in excess of those at contract periods
were made by the syndicates of their
own volition and cannot now be
charged against the sum due under the
contract on July 81.
OTHER SALES
An effort will be made by the adj
visory committee and the city's rep
resentatives to made such. advantageous
financial arrangements elsewhere as
will Offset the financial loss due to
the attitude of the bond buyers, or, by
negotiating with them direct, effect
some amicable adjustment of the diff
ficulty.
The aqueduct commission, the city
council and the advisory committee,
alike, are anxious to reach a compro-
mise with the bond buyers. The APP
pointment of an advisory committee
including several of the most promi-
nent financiers in the city is expected
to greatly facilitate negotiations with
the eastern financiers.
If an agreement can be reached the
work of building the aqueduct will be
rushed. Every effort to achieve this
result will be made. The advisory COM
mittee, which was appointed by the
adoption Of a resolution offered by
C -ncilman Washburn, will get to
work at once.
In offering the resolution with the
approval of the finance committee, Mr..
Washburn said:
WHAT WASHBURN SAYS
According to the contentious of the
bond syndicate no money is due the
city until December 1 of this year, at
which time $4,000 is to be paid. They
contend that the money which they
have been furnishing the city are ad-
vance payments on this years option.
Upon the advice of the city attorney
the council forwarded them a notice
a short time since to the effect that
the funds which had been paid to ac-
celerate the work were considered vol
untary advances made for that pur-
pose and did not affect the payments
due under the contract. The notice
called upon them to take the bonds
named in the contract as being due
July 81. On February l, the syndi-
cate will be called upon to decide
whether or not they will exercise the
option for $4,S96,0O0 for next year.
Statements made by them during the
recent conference in New York would
indicate that their action will be de-
termined by the state of the bond
market at that time, as they distinctly
stated that they feel under no legal
or moral obligations to take the bonds
unless it is profitable.
BAD OUTLOOK
Negotiations with the syndicate are
still going forward, but the prospect
of making arrangements satisfactory
to the city are not very encouraging.
The situation therefore is very en-
barrassing one and the outcome PROB
lematic. 1t is undoubtedly in our ad-
vantage to continue relations with the
syndicate if we can do so on terms
that will be fair and just to the city
If we cannot, then 1t becomes ipcum-
bent upon us as soon as this contract
is terminated to have negotiations with
other parties sufficiently advanced to
cause us minimum embarrassment in
the construction of the aqueduct.
TIE responsibility in matters of this
kind is by the charter imposed upon
the city council. The crisis is too
great and the effect upon the city in
case of any mismanagement is of such
a serious nature that we must spare
no effort or expense to accomplish the
best results. AS prudent and expert
enced advisors are very much needed
the finance committee requests the
council to call upon the following
named gentlemen to aid its committee
in every way possible: Stoddard Jess,
vice president First National bank; J.
E. Fishburn, president National Bank
of California; Henry T. Lee of the
water committion; w. B. Mathews of
the aqueduct board, and ]. o. Koepfii."