Newport daily independent., 1914-08-24
GREAT SAYING IN
 INTEREST CHARGES
iNDISPUTABLE FIGURES SHOW ADVANTAGES OF THE MUNiC-
 IPAL BOND AMENDMENT.
(Greater Arkansas Association

present arrangements, are lOfceu Co pay high rates of interest for accom- odation. Under the terms of proposed Amendment No. 14, mo bonds or oth- CT interest bearing evidences of ln- debtedness, issued under the author ity of this amendment, shall ever be sold at less than par, and when is- sued by cities of the first class they shall not bear greater rate of inter est than five per cent per annum, ana when issued by cities of the second class and by incorporated towns or 1000 or more population, shall not bear 8 greater rate of interest than six per cent per annum"
 It is a we'll known fact that many cities and towns in Arkansas have been forced to pay not five per cent, or six per cent, but eight per cent per annum, and more, for short time ac- comodations The alternative has been placed before the officials of such cities and towns either to pay such rates of interest, or to permit much needed public improvements, or a general character, to fail for lack or assistance by the cities or towns.
 Strange as it may appear, cities and towns in other states, under laws sim- liar to that proposed by the present amendment, are able to obtain mon ey by the issuance of long term bonds at very low rates, namely, per cent,
 
 cent, whereas, Arkansas cities ana towns now desiring money for two, three or four years, are forced 10 pay eight per cent per annum, or more.
 Suppose the aggregate indebtedness of the State and towns of the State of Arkansas was being carried at 4, f-2. 5 or per cent, instead of the rates which cities and towns are now forced to pay for accommodation. Fig ure for yourself the saving there would be to the people in the amount of interest per thousand dollars, by figuring the difference in the rates, and multiply that amount by the num- Der of thousands of dollars which the people of your community now owe, or have been forced to owe, during the past ten years.
 As the constitution is now no city or town can issue interest bearing evidences of indebtedness. Arkansas cities and towns, by general consent, in order to make public improve ments, for years have made prac- tioe of issuing warrants, properly drawn, and approved in every way as required by law, these warrants ma turing from one to five or six years in the future.
 Under the present law these war rants cannot bear interest, either from date or after maturity. There fore, such a warrant for one thou sand dollars maturing in five years, would be discounted by the bank at a rate of interest of 8 per cent per annum or higher No criticism of the banker can properly be made, for the reason that the warrant cannot bear interest, and therefore is not first-class bankable paper. A municipality issuing such warrant would receive fin cash, under the law as it is at present, only six hundred dollars, or less, and that amount, and not one thousand dollars, would be the amount which would be left for use by the city; whereas, if the mu- nicipality could issue an interest bear ing certificate of indebtedness, bear ing say per cent interest, the city would receive the full amount of one thousand dollars in cash, but would not pay the interest of S50.00 each year until after the city had used the money for that year.
 Tn short, the passage of proposed No. IA will enable Arkan sas municipalities to obtain the use of money at about one-haIf the pres make unnecessary the payment of in terest in advance, as is now done. For example, under the law as it is at present, an Arkansas city or town, which issues a warrant for one thou sand dollars, due in five years, would receive at lH6 HuOoI Ouly pOUu.UU S-tSlis and would be forced to suffer the de dIction of the sum of $400.00 from the face of the warrant as interest for five years charged for the use of the s60O.o0. Four hundred dollars inter est for the use of six hundred dollars for five years would equal, on the same basis, the sum of $666.66 inter est on s1,000.00 for five years.
 On the other hand, when proposed No. IA has been passed, municipality, by the sale of low in- terest bearing bond for that amount, could realize $1,000.0O cash. and la- ter pay annually the sum of $50.00 for interest, or s250,0O interest in the five years. The difference between s666.66 and $25000, or $416.86, repre- sents the amount per thousand dollars which the present law places as burden on Arkansas cities and towns, and this is one of the burdens which proposed Amendment No. IA will re-