New-York tribune., 1921-02-05
Hylan and
Craig Upset
City Fl inarnce
Administration ON Taking
Office Began to Whittle
Away Pay-as- = YOU Go
Plan of Mitchell Regime

Mayor Hylan and Comptroller Craig,
as soon as they could prevail upon the
Legislature to help them, scrapped the
pay-as-you-go" plan, which the Mitchell
administration installed to save the
@ty from drifting into bankruptcy
ana 10 insure workable debt margin
Although now at loggerheads, the two
city officials each contributed to the
etacement from the statute books of
the restrictions on spending set up by
the "pay-as-you-go" plan, under which
New York City was required to pay
Tor all It's non-revenue producing i'm
proVements out of the current tax levy.
Expert advice from bankers and
otner competent students of municipal
hnance held that the financing system
adopted in 1916 was necessary to pre-
vent the municipality from exceeding
the boundaries of sound business. With
the "pay-as- -you-go" system virtually
huiiifed by series Of amendments to
the Brown bill, it is limited that the
present city officials are in search of
an alternative plan, and may make an
announcement before long.
Hand-to-Mouth Basis
according to the Comptroller's re-
port on the clty's debt as of December
81, 1919, the obligations Of the citv
amounted to S1,481, ,431 ,597.41. includinu
$66,829 900. 'A0''' "a
=, Under the Craig administration of
the Department of Finance the citv
mas not appeared in the mon,v ynarke}
rs rs seller. of long-term obligations.
me Comptroller has directed the
nnances OF the city on a hand-to-
mouth basis, borrowing exclusively on
short-term notes in anticipation of a
corporate stock issue Ca long term OBJ
llgation) and in anticipation of next
year taxes by issuing special revenue
ponds. At present the Comptroller es
Inmates that $90,000,OO0 of short-term
obligations of the city are outstanding
One of the objects of the "pay-as-
you-go" system was to obviate much of
this type OF short-term borrowing.
Tor which che city is now paying IN
terest at the rate of 500 per cent, the
peak. rate thus far. The notes are of
varying maturities, running from two
to ten months generally, end the
Comptroller is kept busy keeping in
touch with renewals of maturing cor
porate stock notes.
Since the Hylan administration has
undertaken little new constructive
work, Comptroller Craig has been able
to get along without long-term issue,
and, so far as can be learned. he con-
templates none in the near future. He
IS waiting for Az per cent rate and
reels that III the present market he
might have to pay 5A or more.
According to compilations made by
the Commercial and Financial Chron-
iele the city,. frequently renewing.
937,342.73 in 1920. With the exception
of these notes, which are bought by
the city itself for the sinking fund,
most of the notes were placed by
private negotiations with Wall Street
banks and brokers.
Official Figures Lacking
Occasionally there is the formality of
public tenders and competitive bid
ding, but, according to Arthur J.
Philpin, Deputy Comptroller in charge
Of this phase of the department, this
is done only when the market justi-
fes. There is no close check on these
operations of the Comptroller, and the
city must depend on the bargaining
ability of Mr.. Craig and his deputy
According to the charter, the Sinking
Fund Commission must approve the
rate on long term borrowings, if it
differs from the last previous rate, but
does not have to approve the rate on
short term operations.
Because the Comptroller's office has
fallen greatly behind in ali it's pub
lished records, the official figures for
borrowing in 1920 are not available yet.
From the point of view of the banks
and brokers handling this business
short term city notes are very profit
able, although the margins are small.
While the city was disposing of the
notes at a basis to yield the lender
Continued onsnext pase)