The Pulaskian., 1916-12-29
GOOD ROADS
RAISE FUNDS FOR HIGHWAYS
Important Saving Effected by Issuing Good Road Bonds on Deferred
 Retirement Plan.
(From the United States Department of
 Agriculture.)

(From the United States Department of
 Agriculture)
 People of a county intending to would do well to consider the advan- tages to them of the deferred serial plan over the ordinary sinking-fund plan of retiring long-term bonds. Un- der the serial plan, certain amount of bonds is retired each year and the bonds so retired cease to be an in- terest charge on the community. Un- der the sinlzing-fund plan none of the bonds is retirable until the end of definite period, and the entire sum raised bears interest for the entire life of the bond. The county, there fore, pays interest on the money so borrowed and in addition sets aside each year as a sinking fund an amount sufficient to retire all the bonds when they become due. The sinking fund is deposited with banks and earns some interest. This interest ordi- narily is only three per cent, whereas the county has to pay five or six per cent to it's bondholders. The serial plan is a much cheaper method of raising money for road improvement, even when the sinking fund earns in- terest as high as four per cent, and in the opinion of the road specialists of the department should be utilized whenever it is possible to market se- rial bonds.
 In a study of the road bond issues of several counties, J. B. Penny packer and M. o. Eldridge of the divi- sion of road economies, office of public roads and rural engineering, found that the serial plan, if it had been adopted by several counties, would have saved the taxpayers in one county $154,2 ,269, in another county SS0, TOP, and in third county $65,367 over the other plan with a sinking fund bearing interest at three per cent With a sinking fund earn ing four per cent, the saving would have run as high as $72, 2,2S8 in one of these counties. These con- clusions appear in the recently pub lished Department Bulletin 393, Eco homie Surveys of County Highway Im provement.
 The following concrete examples are taken from this bulletin:
 "In Dallas County, Ala., the bonds amounted to $350,000, payable in 30 years at five per cent. Assuming the sinking fund to bear three per cent in- terest, as set forth in the chapter on Dallas county, the total financial bur- den to the county for interest and the liquidation of the bonds during the 30-year period will be $745, ,702.80. An equal amount of bonds at the same rate of interest, if issued under the deferred serial bond method, with the first bonds payable six years from the date of issuance and an equal amount payable each year thereafter for 24 years, would cost the county at the end of 30 years $665,OO0, or differ ence, as compared with the sinking fund method, of $S0,7O2. If four per cent could be realized on the sinking fund instead of three per cent, the saving for the deferred serial plan over the sinking-fund plan would still be SAT, 7,216.
 'Lauderdale county, Mississippi, which issued $500,O0O of five and five and one-half per cent bonds, adopt ed the deferred serial-bond method, with the first payment coming II years from the date of issue and the last payment 9 years. If the county had issued the bonds on the 5-25-year basis the cost would have been $906,S75, as compared with the cost of the basis adopted of $972,232, or a difference of S65,367."
 Even in the case of small issue the advantage of the serial plan is illustrated in Dinwiddie County, Vir- ginia. This county issued $105,000 of five and six per cent bonds, payable in 30 years, but the bonds are callable after 20 years. Assuming that they will be retired at the end of 25 years on the sinking-fund plan, with inter- est on sinking fund at four per cent, the total cost would be $218,031, whereas if they had adopted the 6-25- year serial method the cost would be $201, 100, or difference of $16,931.