The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1915-01-16
INTEREST RATE
! ON BONDS STAYS
AT 4 PERCENT
City Will Resort To Old Plan OF
Paying Agents Com
mission"
SCHOOL ISSUE PROVES
TROUBLESOME FEATURE
Charter Change Boosting Rate
Does Not Apply To These
Securities

Detroit municipal bonds will con.
tinue TO be offered at four per cent
The council committee on ways and
means. acting on the suggestion OF
Controller George Engel, Friday morn
Ing decided that city bonds shall be
sold at the old interest rate and at a
discount, rather than increase the
rate, as authorized by the new char
ter provision recently ADOPTED
The reason for this, az explained
by Controller EngeI, is that the city
has S550,000 worth of school bonds TO
dispose OF. The interest rate on these
bonds is not affected by the charter
amendment. the school board act spec
flying that the bonds must be sold at
rate of interest not TO exceed four
per cent Also the controller is
loath 10 increase the interest rate at
this time, believing that the bond mar
ket in the course of year Will ease
up so that four per cent bonds can be
readily sold. Combination and dis
count bids recently received by the
controller on sl,77S,000 issue made
II clear that even at the present time.
when money for investment purposes
Is supposed to be scarce, bond buyers
are willing to accept city paper as low
as All per cent.
The right or the city TO sell bonds
ut discount is matter OF legal opin-
ion. Last year the controller, acting
on the advice OF Corporation Counsel
Lawson, disposed of s3,000,O00 worth
of bonds at a discount or commits
sion.' as il is called in a transaction
OF this kind. The CITY had no trouble
in finding a buyer under this arrange
ment, and discount bids we're receiv-
ed In answer TO the controllers recent
advertisement for bids, although he
specifically stated that he did not
want discount bids, preferring TO see
what results were TO be obtained from
bids on 4, 4 IA and 4 l-2 per cent
interest rate basis.
MY idea is 10 sell bonds at a dis
count, or sell four per cent bonds at
par and others at from IA 10 liz.
so that by combining school bonds
with others the rate will be sufficient
10 take care of the tour per cent
school issue" Controller Engel told the
committee. THE best plan, as far as
can figure out, would be to issue all
bonds at four per cent and sell them
at par, allowing the purchaser COM
mission. Ii would be impossible for
the city to furnish enough Ia per
cent bonds to take care OF the four
per cent school issue required for the
coming year, and we don't want TO sell
4 IL per cent bonds IL we can help
t.,
Ralph Stone, vice-president of the
Detroit Trust Co, was present on Con-
troller Engers invitation. He said II
was the general impression among the
bond people that the bond interest
rate had gone up permanently.
The members OF the committee
agreed with Controller Engel that the
interest rate ought to be kept down,
II possible. The committee will meet
next Tuesday TO recommend TO the
council that the recent bond proposals
received by the controller be rejected
80 that he can readvertise under the
new plan. The controller has certi-
fed checks amounting to 100000
which he will return 10 the bidders.
1t costs the city from $50 TO $50 day
Interest money TO hold these checks.