The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1915-04-17
than for financial or executive ability.
Old Loose Practice

than for financial or executive ability
Old Loose Practice.
The issuance of bonds under the
old system afforded opportunity for
loose practices There might be an
election participated in by a fraction
of the legal voters. Officials might
prepare the bonds, following which
they were ordinarily offered to eastern
bond buyers, and the bonds were
sometimes bought at par and accrued
interest, with possibly a bonus. or at
other times with q discount. The pub
lie usually lost interest after the first
proceedings, and as a consequence the
door would be wide open for collision
among the bond buyers to buy the
bonds as cheaply as possible, and d.
vide up the issue among themselves
There was opportunity for sinister in
fluence all along the line, between
officers and the chosen few who
manipulated the bond deals. The cost
of shipping, insurance, and loss of in
terest would, in many instances. be
charged up to the city because of lack
of experience, and worse than all. the
municipality was ever at the mercy
of the foreign market and its annual
terest would vary from five per cent
upward.
Lack of Interest Then.
Few of the citizens knew what the
bonded Indebtedness of the city was;
not that they We're unable to obtain
the information. but there was a gem
eral indifference to and lack of inter-
est in the financial affairs of the city.
There was no close personal touch
with the city financiering.
This is not a criticism of the city OF
Topeka 1t is a mere statement of
what is occurring in thousands of
cities in this country today, by rea-
son of the lame and antiquated meth
cd of handling city affairs.
Six years ago the Prudential Trust
company, of Topeka, Kan, through
its officers. waited on William Green,
then mayor of the city. and his coun-
Gil, in open session, suggesting that as
there was about to be a new issue of
bonds. the Prudential Trust company
would undertake to act as the fiscal
agent of the city. and to sell the is
sue to the citizens of Topeka at par
and accrued interest. without cost or
charge whatever to the city, and would
undertake to maintain the bonds at n
four and one-half per cent rate, which
was one-half of one per cent to one
per cent lower than the prevailing
market rate at that time.
As 1t Was Planned.
After presenting the case squarely
to the administration, pointing out %
them the defects of the old system of
offering the bonds in bulk to the low
est bidder, and setting out the advar-
tages to be gained by a popular sub
scription, the proposition was met by
the stoutest opposition. but the adj
ministration finally decided to make
the experiment. The first popular is
sue OF bonds amounted to $63,075.70.
At that time the Prudential Trust
company was the only organized trust
company in the city of Topeka. It's
relations were, and always have been.
very close and friendly with all the
commercial banks in the city, aud an
Il = -
them, whereby they agreed to carry
any portion of the bonds remaining
unsold at the day named tor distribu
ton, until such time as the trust coIr.-
pany would be able to place the bonds;
the agreement being that the banks
would carry the bonds at a four and
one-half per cent rate until called for
by the trust company.
Banks Took an Interest.
/ mention this to show the good
feeling prevailing among the members
of the clearing house, and the desire
on the part of the banks to promote
the public welfare. The general feel
ing was that the trust company was
going to undertake a policy which
would result in ultimate benefit 10 the
city. and the public at large, without
any rake-off or personal profit, ether
than the general good feeling which
might inure to the trust company
in case the experiment proved success
full.
While the bonds were being regis
tered, notices were inserted in the
daily papers that popular subScrip
lions would be received for them, and
that the small investor would receive
the first attention. In other words.
that during the distribution. all $500
subscriptions would be filled first;
then all $1,000 subscriptions, next
1900 subscriptions and so on up
the line until the entire issue was eX-
hausted.
Exempt From Taxes.
The legislature of Kansas, in the
session of 1905, provided that all Kan
sas municipal bonds. in the hands of
Kansas holders, would be exempt from
taxes. This point was brought out i'll
the advertisement, and almost instant
responses came from shopmen, clerks.
widows, retired farmers, and the tinid
class, who ordinarily keep their money
under cover. The result of the first
experiment was an over-subscription-
The Prudential Trust company under
took the responsibility OF saying to
each one of the purchasers, that il
at any time they desired to sell their
bonds, saving in a period of general
pacic. they could bring them in and
at par. less a charge of one-fourth OF
one per cent brokerage. reserving the
right. in time of panic, to sell the
bonds or u commission, rather than
advance the cash and interest on pre-
seRtation
The trust company law of Kansas
provides that loans made on municipal
bonds as security can be treated as