The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1920-02-23
MUNICIPAL BONDS.

On several occasions in the past we have re-
ferred to the matter of the sinking funds 1or Nhe
ultimate payment of the bond issues IN the ci'y v.
Abbeville. We have advocated the selectloh u
some banking or trust company to handle the money
annualv collected for the retirement OF these oonos
at noaturitv. to the end that the money might oe
,ol.n from, the control of the local authorities,
bodv which is constantly changing and which IS too
of+en tempted to make investments to please some
cot of individuals, or otherwise to endanger the
safety of the money entrusted to their care.
We are glad to see that these are other people
giving this matter attention, as we'll as to note 1ro
the article below quoted that at least IN some
states there is legislation looking to that end' In
a speech made recently by VIM. Henry Holt Oh NE"
York, before the League of Virginia Municipalities
he referred to this matter in the following Words:
Serial Bonds.
elm NV opinion, the general law should, IN the
third MACE require all municipal bond issues to ma
ture in annual series of installments, and shouo
abolish the sinking fund system for future oono IS
sues. The cost to the community OF issuing seriai
bonds is exactly the same as the cost OF Issuing
socalled straight or sinking fund bonds matur-
ing all at one time provided the sinking fund earns
interest at the same rate that the bonds bear But
in point of fact municipal sinking funds are not su-
alv maintained as they should be, and it has SEEM
ed to be impossible to prevent mismanagement and
losses of such funds Again and again the absence
or ins,ficency of the sinking fund makes it neces-
sary to refund the bonds at maturity and to post
pone the payment of the debt to date long atter
the expiration of the life of the improvement for
which it was incurred. Bond dealers and investors
now understand serial bonds and look upon them
with favor. It is noteworthy that Massachusetts,,
New Jersey and North Carolina require all city
bonds to be issued on the serial plan.
Payment of Old Bonds.
sJn the fourth place, the administrative code
should not only insure the final payment of new
bond issues at maturity by requiring serial pay
ments, but should provide definite plan for estab-
fishing and maintaining sinking funds for old
straight bonds This could be done ,as it IS done
in New Jerseya by placing municipal sinking funds
in the hands of1ocal sinking fund commissions lnde-
pendent of the local authorities, by creating new
state officer to supervise the maintenance and ad-
minstration of sinking funds, and by requiring
municipalities to make certain annual Contributions
to their sinking funds 1t would be lmpractcaDle
in many cases to make good the present deficits IN
sinking funds, due to Encouragement and losses IN
the past. The tax burden would be too heavy, and
refunding must be allowed to some extent. But
there is no why the annual sinking fund con-
tributon should not be at least equal to the amount
which, if contributed annually from the original
date of issue of the bonds to the date of maturity
assuming that the sinking will earn 1-2 or per
%cent per annum compounded annually"
In South Carolina we have not yet had any leg
isation looking to the safeguarding of these funds
The large number, and increasing size OF bond IS
. sues by all municipalities should suggest to the
legislature i'm this state the enactment Of law
looking tooshe handling of these funds by some
body entiEsly Independent of the mayor and city
council ofa prtieular city. But until it does, that
is no reasSn Why Sc authorities in Abbeville should
not seek5oms legislation which will serve the same
purpose3n s. faE ass3 3his. city is concerned. There
are fveSban4Rs il thS csy of Abbeville anyone of
tIyhich Will .&hdsgtakg ths management of this fund
efor eopa rsnu5eras5pn;e We need law which
Twill as9hozize She eseonof sne of these banks,
or m@e tSan:9 9neSs 3 Sinking Fqqd agent of the
city b reSeivs ana invest theA f6nds, with power
to f9Sce ahes spay@enf' intS s hands, of all sums
levied By the City cSundl Br T. retirement of
bonds. q s 5 : = q s s
HatiHhe6 6tgCo6hcilosesA aBd pssocises the. en-
aosaepS Of lqS lqskisE tGShSsnaIt Sould q as
we'll fS tg pssplesto ssss ap asrthsr bsnd issnes,
The MANAGEMENT & the sfkiks funds 5f the-scity
by the present City CO unca emphsszesthe neeessi-
ty of so doing.