The herald and news. [volume] (Newberry S.C.) 1903-1937, 1917-03-13
WHY NOT SELL SECURITIES
AND PAY OFF BONDS

Mr. Editor:
Your editorial article in the last
issue of The Herald and News, upon
the Commissioners of Public Works
issuing s3O,oO0.0O of new bonds to re-
deem a portion of the issue of the
S42,00000 of the water and light
bonds, makes a very appropriate sug-
gestion, g well as pertinent inquiry
as to tn advisability of their propo-
sition, to sell 100000 worth Of new
bonds and to redeem the old bonds
with the proceeds of the sale.
A more businesslike proposition, as
you suggest, would be to sell out
right the $25y50O00 worth of bonds
and apply their proceeds with s6,564.-
81 cash in the sinking fund and take
up $32 100000 Of bonds with that mon
ey, and get rid Of s32,00O.0o OF
debt, rather than sell new bonds to
buy the old ones, and have the sink
ing fund holding on to 100000 In
vested, in securities, tie interest On
these securities to pay the interest
on the $30,000.00 worth OF bonds, for
twenty years. Whether the interest
on these securities will pay the in
terest or not the city will have TO :
meet the interest on her bonds. And
the debt of the city twenty years from
now will still be the 100000, and
what concerns the city IS will these
assets or securities be worth $780,
10000 at that date Any depreciation
in their value will be loss to the
city.
At this time these securities are
worth par, and the question is: Is
it not best to sell them now and set
tie the debt?
Now as to the sinking fund, having
these securities to sell, we take the
following figures from the last Feb
ruary's report of the condition of the
sinking fund on January l, 1917.
which shows at date, assests amount
ing to s42,4S7.sS. Of these assets
there were:
Bonds at par value. ..... $25, ,50eoe
. Cash in bank. 6,564.S
making s32,06497 OF assets that
upon April l, 1917, might have been
utilized to purchase $32,0G0.00 OF the
original issue of $42,000.00, leaving
: only 100000 of the debt.
This same statement of January 1,
1917, also shows that there was $10,-
487.95 of good paper assets, and with
the city paying up $32,0o0.O0 OF her
debt, it ought rot to be duflcuIt
proposition, with the city's credit and
$10,4S7.S5 of good assets to borrow
100000 at per cent. Take up
this balance of 100000 of bonded
debt, collect in twelve months this
$10,48795 which is all an interest
bearing asset, and pay off this S10,-
00C.00 debt and settle the whole mat
ter
Or with $6,564.97 in money and $25s
10000 in bonds they could propose t.
exchange these bonds and cash fea
$32,O0O00 of bonds, for the parties
holding these bonds would have to
take their face value s32,000.00, when
the larger portion of the bonds OF
sinking fund could be sold above par.
To sell new bonds will be addition
al cost, the attorneys fee for the draw
ditions for the city, the printing of the
bonds, and the advertising and com.
mission sales, all of which expense
could be saved by either OF the above
plans.
With grave doubts as to the authori-
ty of the commissioners to issue such
a series of bonds, or the legality Of
the bonds when issued for such pur-
posses, with assets on hand sufficient
to take up all old bonds, that are to
be redeemed under this plan; and
also with much misgiving as to the
advisability of the plan proposed, for
arranging this debt, I think it would
be very desirable to call meeting OF
the citizens.
When after hearing the advantages
and Disadvantages of the proposed
plan, the meeting may vote as to the
advisability of adopting same.
James Mcintosh.