The herald and news. [volume] (Newberry S.C.) 1903-1937, 1917-03-23
CAN CITY ISSUE NEW BONDS
AND HOLD SINKING FUND:
Mr.. Editor:

The statement of the commission
ers Of public works in your last is
sue is very unsatisfactory, as their
plan for issuing $30.000.01 worta OF
new bonds, selling the same aIl Win
the proceeds, buying or ralee:nia1r m
equal amount Of the $42,0D1.Gt issue
of bonds, does not reduce the deb;,
a single dollar.
The commissioners of public works
are men sworn into office and placed
in charge OF a sinking fund. for the
redeeming Of debt, and are tirectel
by law as to the investm ent Of this
fund. With the privilege Of, at the
end of twenty years, using this fund
derived from an annual payment by
the city of $1050.00 with all accumu-
lations of interest accruing thereon.
to redeem one or all of this $4,000.
90 issue of 6 per cent bonds, as the
amount of this fund will purchase.
Now at the end of the twenty year
period Mr. Spearman. chairman, re-
ports on January l, 1917 this fund
amounted to S42,47S95 to pay off this
$42.00000 debt.
The city has expected the commits
sioners to have all business arrange
ments in such shape, as to enable the
said commissioners to use this $42,-
487.95 to pay this s42,000.00 debt.
When instead of being ready with
the money to pay this debt, the cen-
missioners make the astounding prop
osition of using $12.00000 Of these
assets and buy s12,000OO of the s42,-
10000 issue of bonds and issue new
bonds to run for twenty years Of the
amount OF S30,000.00. sell the same
and take up the balance OF the $780,
10000 of the S42,00000 issue, leaving
in their hands for management the
remaining $30,4S7.95 of assets. as au
Offset against this issue OF .S30,0C0.09
The present showing of their past
management Of the fund would not
be an inducement to keep them IN
charge Of it. And Mr.. Spearman's
statement that certain bonds held are
not due and hence not available does
not hold good, for all these BONDS
purchased and held by the commits
sioners, were purchased in open mar
ket and can be sold in open market.
The Charleston bonds are at par or
above par, The City of Columbia
bonds are rated at above par. The
100000 Newberry Lutheran Col
lege 6 per cent bonds should sell al
considerably above par. The Chicora
first mortgage bonds are worth par,
the city sewer bonds were sold above
par when issued, and the s3,OOO.oO
bought for the sinking fund
cost more than par, and should now
readily, if advertised, sell for par.
And with securities worth their face
value or more in hand, it certainly Is
a questionable policy to continue
holding these securities, and issue
new bonds.
If the commissioners cannot reaRze
on their investment now, what Will De
their condition twenty years from
now? The main question after all
for the citizens to consider is as to
the legality of this issue Of bonds.
The best legal advice I have got
ten is that, if the city owed this s42,-
100000 of debt and it had matured'
and she did not have the money IN
her treasury to pay the bonds, she
could issue new bonds, just as she
could 60 to a bank and renew her
note. But there is no law OR statute
that will authorize or legalize CITY,
or public officials Of city, when they
have the money Of sinking fund On
hand, accumulated to pay certain
cebt, to issue new bonds to pay this
debt.
Now if this issue Of bonds is made
cannot one or more taxpayers get
out an Injunction against the issuing
of said bonds? Or at any time get
out an injunction against the clty's
paving interest on these bonds, ana
twenty years from now have the city
in law suit, as to whether the oonos
are legal.
James Mcintosh.
~ L.