The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1920-07-13
prepared BY the Taxpsyers
Assocfnfion.)

funds for tho construction mi Inn
OF state highways and for
meeting allotments OF federal aid
funds made TO the tate. There
other acts passed by the same legis-
lnture for the game purpose. but such
other acts seem not 10 nave provided
sufficient revenue 10 meet the federal
allotments. An examination OF the
revenue needs leads one to the con-
ciusion that without the assurances Of
the bonds provided for by the act un-
der consideration. there will BIO lack
ing about $685. 900 to meet the funds
allotted TO New Mexico, unless some
other provisions shalt be Hade at the
session OF the legislature In 1921.
II the bond nsue under discussion
should fall to be approved al the
election In November. or u when 40
approved they should not be saleable,
Il will be possible for the legislature
that meets in 1921 to continue for
lone year the three mill levy provided
for by chap,er 1885, laws 1919. IL
will he possible TO meet the federal
ali0tments already made fully by car
ryIng this levy FOR, one additional
year. The reason for believing this "
that the state has until June so. is22
to secure final approval by the fed
eral government on projects on which
federal aid will be extended. such
approval having been secured by the
date Indicated, New Mexico. will he
fully protected in the amounts al
lotted to the state, and the extension
OF the three mill levy Tor the year
1899 will meet entirely tho federal
aid allotments.
The bonds proposed TO he issued
under chapter i72 shall be finally
payable thirty years after date OF
issue, and II II provided that they
may he redeemed at the option OF
the state at any time after 10 years
from date OF Issue.
The bonds shall be sold ut a public
sale to the bidder or bidders Offering
the highest price. hut no bid shall be
accepted which II less than par value
OF the bonds plus accrued Interest
AZ to the possibility OF selling the
bonds there IN considerable doubt.
To-day Investors al buy liberty 4 "a
per rent government bonds Mt $1,000.
which gives them a c. ent yield OF
& pcr cen or 9 i-l per cent to ma
Liberty 4 Ia per e bonds
can be bought for from $500 TO
$500. Dominion OF Canada 9 1-2
per rent bonds due In 1929 ARE to-
day p~urchasable at 5000. which
gives them a current interest return
OF q per cent, orr per cent yield to
InitNuNNlNs GNNIN' VI AN1 hahttAh NNfh
road corporations In the tnited
States. such AZ the Pennsylvania and
the New York Central. have been Of
fering gilt-edged equipment bonds
rnying Z per cent. II Ia evident In
The face OF such conditions that II
would he difficult to market these
highway bonds at all. and II Il were
possible they would have TO be sold
at much below pas. a Cleveland
bond house offered IN June New Mex
leo state highway bonds, due July !,
1921. on a q per cent basis. Unless
this proposed 100000 Of New
Mexico Dad bonds were absorbed by
the New Mexico permanent school
fund nj u higher rate, they could not
in all probability be sold on the mar
ket AT more than so cents IN the dol
lar. a 30 year bond bearing, ~
per cent to yield q per cent from
maturity woald have 70 be sold at
.792l or at 50 cents. This would
produce only 1900. 900. The annual
interest, charged or this realized
amount would be $50, 900, or a total
charge considering the time and pro
vision OF the law, OF $~2,f00,O00 for
40 years. That Is to say, II would
ultimately cost the taxpay,rs OF New
Mexico $4,000. 900 10 make available
for the present road building pur-
poses the sum of 1880, 600.
with this Si,s0O,o0o, so miles OF
road could be constructed II It cost
500. 900 per mile. Under he present
cost OF labor and material S2O,0 900
per mile for the Kind OF road we have
been %building'i Ia a moderate cost. IL
roads are built that actually outlast
tic period CT the q redemption OF
bonds. $40, 1000 a mile would be u low
estimate, and at this cost n total OF
SO miles could be built. In n case
this would be au average OF 4 Ia
miles to each county. In the other
about 2 miles. In the first ease the
total ultimate cost 10 abe taxpayer
would be $4,000 a mile for so miles;
and In the other case b3 miles would
cost $4,000 a mile.
The foregoing paragraph assumes
that the bonds would he soId AT less
than par. This III impossible. but the
bonds might be taken by the con-
tractors. such contractors, however.
would not take the bonds except up
on the basis Of the apparant market
value. The bonds might be taken by
the contractors at par value and the
discount taken into consideration In
the bid submitted by the contractors
for the work. IL this is done then
the result would he practically the
same IN set forthsnbove.
There Is OF course the alternative
that the bonds might be sold TO the
state by Investing permanent school
and institution funds In them. Thus
II might he possible to secure $1,000
600 for the bonds. In doing so. how
ever, the action win be subject 10
criticism II 'un Investment OF such
funds In made in securities paying
four per cen when "a higher rate
might he secured by investment In
other form OF security.
The practice of Investing perman-
ent funds In securities On any other
basis than their market value In an
extremely questionable one, and
should be avoided.
Statements already mad have as
sumed that amounts raised to redeem
principal would remain In the sinking
fund until the date OF maturity. IL
this should be the case there would
be an onset 10 the total interest paid
arising from this, Interest on bank bal
ances at the rate or 3 per cent. II
one tw~enty-fifth OF the principal
amount were levied annually. II In
possible that Interest In the amount
OF 3 per cont on hank deposits would
be paid 10 the stnfe. Such interest
on deposits. howeyer. Would not go
to the road fund. nor I'd pay the in