The Columbia herald. [volume] (Columbia, Tenn.) 18??-1935, 1911-02-24
STATE MUST PAY A
HIGHER RATE Of
INTEREST ON DEBT
REFUNDiNG BONDS CANNOT BE
FLoATED AT THREE AND
HALF PER CENT.
WILL COST TAXPAYERS MORE
Probable That the Rate May Go AZ
High Az Four Per Cent In Order to
Sell Securities at Par-Replies
From Bond Holders.

NASHVILLE, Tenn, Feb. 90
While no definite action has yet been
taken by the legislature of Tennessee
toward preparing to meet the State
debt which natures two years hence,
from what is already known the indi-
cations are that Tennessee will proba-
bly, be taxed something like $4,000 q
gear more in interest when the new
arrangement is made. That estimate
= based on the idea that Tennessee
cannot float bonds at less than 81
Der cent, and the interest may have to
be even higher. The last bonds float
ID In 1893. the penitentiary issue, had
TO be put out at Az. On AZ per
cent basis the interest increase would
De approximately $4,000.
y Some days ago Senator Frand Boyd,
chairman of the State Senate commit
tee on refunding the State debt, ad-
dressed letters to the holders of the
States registered 3 per cent bonds,
representing about half of the debt
that must be met, requesting their
views on the subject. He has receiv-
Cd replies from about 80 per cent of
the number addressed.
The general opinion expressed in
these replies is that the proposed new
bonds can be foated, but not at 8
per cent, the present rate. The rate
which the letters suggest the State
will have to pay ranges from 81 to
~ per cent.
The debt to be arranged for con-
sists of per cent coupon bonds, due
July /, 1913, to the amount Of $4,316,-
800, and 8 per cent registered bonds,
due the same time, to the amount of
e4,906,00O total of about $9,250,00O.
In addition there are Az per cent
coupon redemption bonds, due Oct. /,
1913 to the amount of $1,000,00O and
100000 penitentiary bonds, bearing
the same rate and maturing at the
same time. There are also $685., 900
8 and 6 per cent certificates OF In.
dcbtedness held by the institutions
of the State. The latter may be al
bowed to continue outstanding. OF
tho second lot of bonds, the redemp-
tion and the penitentiary bonds, those
WHO have made a study of the State
Idcbt, think this $1,600,0O0 of debt, can
best be retired by means of the sink
ing fund. leaving the $9,200.0O0 to be
arranged for.
One proposition, or rather one idea,
about handling these is to secure leg
tsfative authority for the State Fund
ing Board, composed of the Governor,
Treasurer and Comptroller, to issue
The necessary amount of bonds at 31a
per cent on two years trial, and then
If they cannot be floated at 3h per
cent to raise the interest rate. This
idea comes from the States expert
ence in 1891 when the issuance of
81, 461 900 4 per cent bonds was au-
thorized, but only $4,000 of the is
sue could be floated The result was
that the next Legislature had to raise
the rate to Az per cent. However,
the State saved round sum in inter-
est on the block that was disposed
OF at the per cent rate.
There have-been no suggestions 80
far about what form the preparations
TO meet the State debt shall take,
whether commission shall be ap-
psinted, or the matter be left to the
funding board. However. 1t seems to
be certainty that Tennessee II going
10 have to go down into her stock
ing for more interest.