New-York tribune., 1910-02-21
CITY FINANCES
TO BE SET RIGHT
CONTROLLER " ILL
TURN on LIGHT.
-4ndre5c Mills Says Credit u as
Hurt by E.rcess Rerenue
Bonds Has Nesc Hope.

,,rreseryed ofncial statement OF the
-7nanrisl transactions Of the city that
-be +ax17ayere have been allowed TO nave
.-,- many ,-esrs He will frankly sho"
,rba- bss been done with trust funds
v-7ar corporate stock proceeds nave been
r7isappIied and what revenue ponos
have since consolidation been Illegally
issued in excess of the Collecuole taxes
avanab bic for their redemption or used
r, disregard of the charter for purposes
ether than the requirements Of the ouo-
--et on whose account they were issued
lie viii thus start a housecleaning
movement Of great Importance 1t VIII
he the first step toward providing tor
-be hinge burden Of So. .oe0.0o9 of rev.
enua bonds which we're long ago ofil-
ria-lv declared TO have no coliectloie
taxes behind them. ana for the stopping
f the reckless revenue bond issues 10y
which former administrations piled up
floating debt of unwieldy proportions
md unknown size which weighted the
-axravers with high interest charges at
nigh rates and seriously impaired the
ri-,-s credit and market Tor corporate
STOCK
situation by- the new Controller will be
ct great beneft 10 the city. in the opin-
ion Of disinterested financiers. though
some persons who have Profited by the
high rates paid on short term revenue
bonds may not be 50 much pleased An
drew Mills. president of the Dry DOCK
Savings Bank one OF the largest holders
~ the city's corporate stocks, speaking
10 Tribune reporter on the existing
conditions Of New York's finances and
the hope Of betterment through Mr.
Prendergast's policy. said:
For years the investing public has
known that the methods by which the
Cirv-s finances were being administered
left a great deal to he desired. Yearly
borrowings upon revenue bonds vastly
in excess Of budget needs indicated the
existence Of q temporary debt much
greater than the collectible revenues le-
CaIiz- available for lis liquidation. There
tss been lack o. frankness in the
ofTlcial reports as TO the city's financial
standing The extent Of the floating
6eb1 has been 2 nebulous factor II has
been an unknown quantity that could
not he accurately gauged- There has
been nothing 10 show the halance OF
accounts and indicate whether money
raised by the sale Of corporate stock
pas being used for the purpose for
" hiCh II vas borrowed
CITYS BONDS DECLINED
There never has been any question.
of course. about the city Of New York
beng good for every dollar Of its debt,
but this lack Of frdnkness in the state
raent OF its financial standing has for
vears been discounted in the money
market. and as a result the value OF
-he citvs securities has steadily de-
lined This kind OF evasion IS always
more disastrous than the plain truth.
no matter how bad it may be. To-day
the city Of Philadelphia is able to mar
zet its bonds on q / per cent basis
II comfortable premium over par
value. while il is very doubtful If the
greater and more wealthy city Of New
York could at this moment dispose OF
fts corporate stock on per cent basis
st all.
The savings banks Of the state are
l7v far the largest individual investors
IN the city's long term securities Their
aggregate holdings to-day total consid-
ersbIv more than S110.eeo.oeo Of these
bonds ANY condition which has the
effect of depreciating the value as an
investment Of the City's securities IS
consequently 4 matter OF vital interest
20 the savings banks. For instance. A
IL per cent New York City bond sold
-er Years ago at los. or = points over
mar zaIue That same bond Is quoted
TO-DAY on the market at 80. IL points
under par value. or l. points under
-.-hst II sold for ten years ago Some Of
this depreciation is due to the fact that
money is dearer to-day than it VAS
then. Besides. at that time New York
city bonds enjoyed an almost exclusive
privilege If being free from all taxes
But even taking both these factors into
consideration there has been steady
depreciatior in the value OF city secnri-
,iez dine almost entirely TO the unsound
methods Of conducting its finances
The fasads mental weakness ~ the
caist.ng s.stem lies IN the manner IN
which rhe budget * financed The eX-
penditures for running the city begin
The first day Of the year 7 ne taxes
"'lf Of which these expenditures must
l'e met come into the city treasury only
during the last three months, 50 that
for nine months out of twelve the city
has 20 live upon borrowed money. In
The annual budget practically every dol
Tar NJ taxes levied is authorized to he
expended
UNCoLLECTIBLE TAAES.
Tho Controller is empowered by the
charter tc borrow money a. it is re-
ouired 10 pay budget appropriations by
rhe issue Of revenue bonds which the |
,farter SAYS, must he paid out IF the
ears taxes when collected ia case !
more money is required for budget needs |
-haD is collected in taxes. these revenue /
s,oDGs rnuet remain outstanding and IN
lajd Al the end of the year, or be paid
al OF money received Tor other than
budget purposes. But experience has .
shown thar 4 considerable amount OF
axes levied each year is not even col
lectible. vet the budget calls for the eN-
nonditlirc of practically the entire
:oorur Of taxes levied.
Huge issues of revenue bonds each :
s.st b.,anls . necessity to keep the
d, .rlr.er4rt debt floating. The money
-l. ,.ae y4ota5ed with these seturl-