The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1920-06-17
GILBERT SAYS
LONG ISSUE is
A NECESSITY
Does Not Think Light I'm
provement Bonds Can Be
Floated For Short Term
Quotes Experts.
SEES NEED OF A BONUS

In a statement made at the city
building Thursday, Harry Gilbert.
president of the board of public
works, reaffirmed his contention that
If the proposed bond issue Of $275,OOO
to provide a new 5000 h. p. turbine
and other improvements at the mu'
nicipal plant is to be successfully
floated, the bonds will have to be
issued on a plan similar to the one
provided in the pending bond issue
ordinance.
Under the provisions of the ordln-
ance a period of Is years would elapse
before all of the bonds matured.
Some city officials have taken the
position that the life of the proposed
bond issue should not be more than
five years, the city holding the option
to retire any or all Of the bonds at its
discretion after that period of time.
Says Short Term impossible.
Mr.. Gilbert declares that in his opin-
ion it would be almost impossible to
float at this time a comparatively
short term bond issue.
He has consulted with bond dealers
and bankers in various places on the
question of floating the proposed mu-
nicipal plant issue and, he says, the
replies he has received from these con-
Germs support him in this contention.
One Of the largest bond dealers in
the state writes to Mr.. Gilbert that
the proposed bonds should draw not
less than six per cent interest and
should run for not less than ~
years.
The letter stated that Lafayette re-
Gently made 100000 bond issue,
bearing six per cent interest with
life of 10 years. The writer stated
that serial bonds should run from one
to 20 years with an average life OF
10 years. at the same rate of interest.
May Have to Garry Bonus.
An Indianapolis banking concern,
writing to Mr.. Gilbert, also stated that
the proposed bonds should bear not
less than six per cent interest, adding
that even then it was doubtful If they
could be sold without offering small
bonus
The letter also made the assertion
that the life Of the bonds must be
long enough to make them attractive
to Investors; that they should not
mature under 10 years.
The letter concluded with the state
ment that if the bonds could be sold
locally it might be possible to have
them mature in a shorter time. Inc
positive statement was made, now
ever, that the general market Woulo
not absorb short time bonds
Local Buyers Not interested?
Mr.. Gilbert expressed the opinion
that no success would result from any
effort to dispose of the proposed issue
in bonds Of small denomination OF
fered locally.
He based his opinion on the fac
that practically all classes OF Rlch
mond people who have money to IN
vest are loaded up with Liberty BOND;
and that their experience with these
bonds would not encourage them tt
invest in local bonds.
1T will not be necessary for council
in authorizing the proposed bond issue
TO fix any definite rate of interest tina
the bonds shall bear" Mr.. Gilber
said. 1T can be provided in the ord
nance that the bonds shall not bea
interest to exceed six per cent.
May Be Year Before FIotation
If the issue is authorized it may b'
year before the city will find i
necessary to float the bonds. and b,
that time the prevailing rate of inter
est for such bonds may be lower thar
the rate which now prevails, six pc
cent
II think that the municipal plan
can so manage that interest payment
will be only a very small burden. |
is almost certain that local electri
lighting and power rates will be IT
creased to a point where the plan
will be able to show profit.
Plant earnings can then be place
so they will bring in prevailing inter
est returns, and the money so secure
can be applied to interest on the plan
bonds OF course a special plant sink
ing fund would be provided TO tax
care of the bonds