Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-12-10
gutenberg HOPES
!. FOR SINKING FUND
Matters Shaping Themselves to
City's Best interests, Says
Research Bureau Chief
SECRECY THING OF PAST

Frederick p. Gutenberg. director of
The Bureau of Municipal Research. to-
day said that the sinking fund stua-
tion was not substantially changed by
the open meeting Of last Monday, but
that he felt the policy of giving the
elected representatives of the people
The city Council--any information they
wanted for transactinG the public bust.
ness would eventually win out
The policy of secrecy that obtained
In the past will not be the policy Of
the future, according to Mr.. Gruen-
berg. He said he believed that matters
were shaping themselves in III" h"
interests Of the citizens Of philadrl-
phia. and that he was thoroughly sat.
fsfed with the progress OF events.
Mr.. Gutenberg took occasion 70
comment on recent editorial in the
EVENING PUBLIC LEDGER on thr sink.
ing fund. entitled That Sunk Sur
plus" Mr.. Gruenperg pointed ont
chat while the editorial was to be com
nended in it's attitude Of sympathy to-
ward the couse of light on public ques
mons, II fell into the common error Of
approaching these technical accounting
questions in way that confuses rather
than aids the discussion.
He attributed this error "a the fact
that members OF the Sinking Fund Com.
mission had themselves sometimes been
fnexact in the Use OF technical terms,
and that their more or less official state
ments had doubtless been followed by
the author of the editorial.
He pointed out that the editorial
spoke Of the cash balance in the hands
OF the Sinking Fund Commission,
amounting to over $4,000 900, as a
surplus" which is not correct. for
the reason that the amount of cash that
happens to be on hand has no actual
relation TO surplus. but is merely
that portion Of the holdings of the
Sinking Fund Commission which is not
invested.
The surplus, strictly speaking. is
that part Of the assets Of tho sinking
fund over and above the calculated
reserve which the commission should
have at any given time in order to be
able TO pay the respective loans at
maturity, calculating the expected earn
fngs OF the sinking fund investments
At rate determined upon in advance.
That basis Of calculating earnings
ct the present time is, by decision OF
the commission in 1914. 81 per cent,
which IL ultra conservative in view of
the fact that investments now being
made are earning in the neighborhood
Of 5 per cent and the earnings OF the
sinking fund as whole are between
4 and 8 per cent. In the case of the
eity's fifty year bonds. the commission
- even more conservative as they have
hxed the earnings basis at only 9 per
cent.
The position OF the Bureau of Muni-
eipal Research has been that granting
for the sake OF argument that the
ultra conservative 3E3 and 3 per cent
bases are proper, there is in addition
70 such reserves a Surplus" Of over
81 4,OOO. 900, which could gradually and
conservatively be utilized in number
Of possible ways, in the public interest
Probably the safest and all around
best procedure, when the inevitable
reform comes. will be to make the
moderate reductions on future install
ments that will gradually absorb this
surplus, yet leave sufficient to pay every
dollar Of maturing debt while reducing
the taxpayers annual burden.