The New York herald., 1921-08-19
DIFFER $2S4,OOO,OOO
!. ON LEGAL CONDITION
OF CITY DEBT Limit
Craig and Brown Argue at
Length in Meyer Com
mittee's Inquiry.
COURTS MAY DECIDE
Comptroller Cites Opinion
of Appellate Division to
Sustain Him.
HYLAN GETS A RESPITE
Counsel Charges He Has Used
All Possible Expedients to
Evade Constitution.
HYLAN GETS A RESPITE

Elon r. Brown, counsel for the
Meyer committee, withdrew two of his
charges against the city's financial ad-
ministration yesterday and admitted
after an all day conflict with Comp
troller Craig that the big issue in
volved in the question of the debt limit
is whether the Appellate Division of
the Supreme Court was right or wrong
in a decision given in 1913 regarding
the use of dock and transit bonds.
The Comptroller stuck steadfastly
to his contention that the city is not
overheard" financially, but has debt
borrowing margin of s137 7,000,0 900. Mr..
Brown was equally stubborn in insist
ing that the city administration had
overrun it's credit by $117.000,0 900, but
finally modified that contention by ad-
mitting the issue was up to the courts.
If Mr.. Brown is right, the Comp
troller said, the validity of the dual
into question and the status of bonds
covering those operations again de-
termined. But the Comptroller said
the question had been gone over in
court and that there was no sub
stantial basis for the Meyer commit
tees charge 1t is not improbable,
however, that some sort Of test litiga-
ton may result to clear up the techni-
calities surrounding the issue of self
sustaining dock and transit bonds.
Evading the Constitution.
The Hylan administration, 1t was
said, has resorted to every legal device
conceivable in It's effort to get around
constitutional restrictions and obtain
all the money possible to keep the
municipal government running with
out boosting the tax rate too high.
| This has all been done to evade the
debt limit restrictions.
1t was give and take struggle be-
tween the Comptroller and the lawyer
Mr.. Craig was aggressive. He took
charge Of the inquiry repeatedly. and
fired questions at Mr.. Brown. The latter
objected he was not on the stand.
| But you do not seem to tumble to
the situation at ALL" the Comptroller said
| impatiently after he had gone over set
Of figures several times. The argument
went around in circle for hours. Oc-
| casionally some of the committeeman
and audience seemed to catch a little ray
OF light, but that was extlnguished In a
moment by a new set of technicalities.
| Mr. Browns contention was this I'm
| der the constitutional amendment of
| 1910 bonds issued for self-sustaining
municipal enterprises like docks and sub
ways were to be excluded from the debt
| limit The amendment requires the city
| to get a ruling from the Appellate Divis-
| ion a to what bonds can be issued under
| this restriction. The court in 1918 ruled
that s117,00O,0O0 could be applied to
docks and subways. These bonds are
not yet self-sustaining, and until they
are cannot be excluded from the debt
limit.
| Comptroller Craig parried with this
answer The Appellate Division author
ized the issue of the $i17.000,000 for
docks and piers that money has been
spent for that specific purpose, and by
the ruling OF the court that amount
/ cannot De cndrSeu against lnc ueDl ILlit.
Four Phases In Attack.
When the Comptroller was called on
to defend his position regarding the debt
| limit, he said Mr.. Browns attack on the
city's credit was based on these four
arguments:
That tax notes are debts and must be
charged against the debt limit; that
revenue bonds outstanding at the end of
| 1917 were in excess of the constitutional
| limitations that there was insufficient
| deduction of the assets of water sinking
funds In arriving at the net debt, and
that the Sill, 100000 exempted by the
court from the debt limit for docks and
piers should be placed in the debt limit.
| After a little debate Mr.. Brown ad-
mitted he had changed his opinion about
the two first charges. and was willing to
strike them out. The third was modified
so that little was left of It. The con-
troversy thereat simmered down to the
100000.
The Appellate Division decision deal
| ing with the bond exemptions was re-
viewed. @
III the decision had not been given
4 there would have been no means by
which the dual subway contracts could
nave been let" Mr.. Brown said. The
\ witness retorted
I Yes. It now turns out that your
criticism Is aimed at the Appellate Divi-
sion. II the Appellate Division Is wrong
I that strikes at the whole foundation OF
the contracts and II may be that your
committee will make recommendation
that we get relief from those contracts" /"
II will consider it," Mr.. Brown said.
But the effect OF this decision has been
to reduce your debt limit all the time
you have been In office down TO the time
of your last statement. when you had
about s20.0o0.000 on July 1. lastT
THE effect Is just the opposite" the
! Comptroller said. "If what you say Is
correct II would expand the debt limit
by sii7.000.000. instead of reducing II,
and instead of having $4,000. vVO.
which ] say we now have, we would
/ have s254.000. 600"
Mr.. Brown could not see II at all and
again they went over the whole thing.
The Comptroller wanted to know on
what Mr.. Brown based his opinions. and
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