Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-09-20
NEW LIGHT ON CITY LOANS

RY REASON of the current discussion Of
- the pending loan ordinance, officers Of
the city and county government are winning
their way to a fuller understanding Of the
financing provisions Of the new city charter.
They are beginning to realize that Section
Of Article XVII marches more nearly In
step with the principles of modern ac-
counting than q superficial reading would
indicate; that the language, IL not grasped
as quickly as that two and two make four,
Is In fact informed with the spirit Of illu.
mnating suggestion, and conceivably, of i'm
piled direction.
This feature Of the charter was thrown
into sharp relief at the meetings of the
finance committee Of Council when the va
rious public improvements provided for in
the loan ordinance were under preliminary
review. The lessons then learned cannot
fail to have bearing on future loans. even
II they do not affect the final disposition of
the present proposals.
City Council plans to ask the people in
the coming election to approve or dsapprove
Of loan OF approximately $40. 900. 900.
When the bonds are sold the money In to
be used for most varied purposes-and for
improvements whose permanence will be
equally as varied. Yet the period of the
loan for all purposes will be the same
thirty years. It 10 obvious. however. that
while City Hall annex may stand long
after the thirty years have expired. a motor.
driven fire engine will pass into oblivion
long before the termination OF the loan.
The charter empowers the city controller
to determine what shall be considered ns
permanent improvements and, therefore,
lawful items for loan ordinance. His
authority In that respect appears to be final
nla Al
the controller to the effect that the proposed
expenditures are capital expenditures as
distinguished from current expenses" shall
be final and conclusive as to the character
of the proposed expenditures"
In the discussion of this grant Of mower
by the charter, the idea was gradually de-
veloped that the language pointed to q direct
relation between the nature Of the improve
ment and the life of the loan. An improve
ment which would stand for thirty years and
more suggested a loan running for some :
thing like that length Of time, and for an
improvemC..t which would last for n shorter
period, a shorter term loan naturally was
suggested.
Many other cities now grade their loans
according to the nature OF the improve
ments-for some purposes the loan will run
for only five years and for others, ten, ff-
ridiculous, for instance, to borrow money
and pay interest for fifty years for a Hre
engine which would not only wear out within
| a few years but which may also become OBJ
! sOlete at any time because of the progress of
invention.
OF course, the theory of the loan Is that
the object for which the money Is spent shall
function until the debt Is paid of, otherwise
shaky and menacins pyramid OF loans
would be erected ON single and unstable
base.
The municipal loan, graded in term ac.
! Cording to the life of the improvement, is
not new idea in public financing. But
| the new city charter seems to be more
clearly impressing 1t on the minds Of Phila :
delpha officials. And this practical consid.
| Grafton urges itself In support of the science
| OF the subject; where The loan IL broken
up. the several portions will be voted on
separately by the people. 1t will not be
necessary that all stand or fall according
to one all embracing judgment.