The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-09-25
not properly be met out of annual in.

- VI i''F biON Wv
that except to meet casual deficits or
failures in revenues or for expenses
not provided for, to an amount at
any time not exceeding 1000, 900, or
to repel invasion. suppress insurrec-
ton or defend the State In time of
war. no debts should thereafter be
contracted by or on behalf of the
State, unless authorized by law for
some single work or object to be dis
tinctly specified therein: hat such
law should impose and provide for
the collection of a direct annual tax
sufficient to pay the Interest on such
debt as 1t falls due, and also the prin-
clpal of the debt. within fifty years
from tho time IL is contracted. 1. e.. by
the creation Of a sinking fund, and
that no such law should take effect
until II had been submitted to the
people and received n majority Of the
votes cast for and against It. In 1894.
when this provision was adopted. the
State had practically ne debt. Since
that time its gross Indebtedness with
out deducting the amount of the sink
ing funds has grown to the enormous
sum Of $lS6, 900, 900 and an additional
debt OF s45, 900. 900 has been author
ICED. The net outstanding debt. after
| lAI,t,tinn cha ~fpltrD S,.rdo amounts
to upward OF s145, 000, 900. The per
capita debt has risen from 81 cents
in 1903 to $500 at the present time.
! These figures were furnished to the
convention by Mr.. Stimson. chairman
OF the finance committee. This per
capita Indebtedness is far greater
than that of any other State.
This vast increase in deb. is largely
the result of the reconstruction OF the
Erie Canal and the building OF State
highways.
The finance committee reported to
the convention that the defects in the
existing system which made this great
increase OF Indebtedness possible were
twofold: First, IT permitted a debt to
he incurred which need not be paid for
fifty years. during which time 1t in
wolves no obligation except the pay
ment of the interest and the relatively
small amount required for n sinking
f,,nA 20 ~ of Tho 1nlt % thn .pl ~
fifty years; and secondly, It provided
no means by which the length of time
for which the bonds were Issued should
be made to bear n relation to the
life OF the work or Improvement they
were issued TO pay for. The second
defect was peculiarly applicable to the
case of highway bonds. which were is
sued payable in fifty years. whereas
a portion of tho roads constructed
with the proceeds OF their sale might
and probably would not last more than
four or five years. The amendments
recommended by the committee and
embodied I'm the revised Constitution
abolish sinking fund bonds, and require
all bonds hereafter issued hy the state
to be made payable In equal amounts
annually, beginning at the expiration
OF one year after issue; and require the
life OF the bond 10 be limited to the
estimated life OF the proposed improve
ment to the construction OF which the
proceeds of the loan are devoted. BY
force Of these provisions. the State
must begin to repay the principal OF
every loan one year after Il Is con-
tracted. We can no longer put upon
posterity the duty of providing for the
payment Of the debts We contract for
purposes which may have no practical
value to the next generation. The
adoption Of serial bonds will relieve
the State Of the custody and duty of
investing and caring for large cum
lated sinking funds. with the attend
ant risk Of loss or misrepresentation.
The serial bond is a much more eco-
nomical method OF ~repaying a debt
than the sinking fund bond. Mr..
Stimson submitted TO the convention
figures showing that IL the canal debt
of sl1S,0o 900 had been represented by
serial instead of by long term sinking
fund bonds actually issued, the State
would have had to pay at the matu-
rity OF the debt SAC, 677 900 less than
II Will actually be compelled TO pay
by reason OF the sinking fund bonds
issued. That sum represents the saw
ing OF interest which would result
from the earlier payment OF principal
required in the case OF serial bonds.
While making provision for main
tanning the integrity OF the existing
sinking funds, the revised Constitu-
ton authorizes the Legislature to pro-
vide meal whereby outstanding sink
ing fund bonds may be exchanged at
par for new serial bonds, thus reliev-
Ing the State OF the burden OF maxi
Ing further payments of such proper
ton OF the sinking fund as the ex-
changed and cancelled bonds bear 10
the entire issue OF which they are a
part.
nn,an-