New-York tribune., 1922-04-02
Bond Dealers Ask
Aid i'm Default
Rv Canadian 'sowns
Request Finances OF Mu-
inequalities and School
Districts in West Be Put
orr Il Scum q er Basis

Toronto. April l. Although
the credit Of the Canadian provinces
without exception is high and the
Importance Of protecting such credit
is appreciated fully by the several
governments. the situation with re-
srcct TO some Of the western Cana
dian municipalities and school dis
tricts is not 80 happy. The bond
dealers have urged upon the pro
Nlnclal authorities, particularly
thos2 Of Saskatchewan and Alberta.
the Importance Of giving such as
sislance on cnacting such legislation
as may be necessary TO put the
finances of the lesser political SUD
divisions on a sound basis. but as
yet the problem has not been dealt
with adequately. In few cases q
measure OF relief has been provided
by the provincial administration
but much still is to be desired.
The provincial authorities are help
ing some Of the school Districts but not
Unnaturally they hesitate to assume
responsibility for the debts OF all
municipalities or school districts which
haze oVcrborroWcd and arc unable, or
profess to be unable, 10 meet their
obligations. There is some reasonable
ness in the contention that when loss
has resulted Che creditor should accent
j and write il off his books in the case
OF noNds as Of other property On the
other hand. the credit OF thc better
managed Western municipalities and
school districts has suffered severely
because Of defaults by others, and
VerY great aggregate loss has been en-
tailed. It has been urged that it would
be true economy for tic provincial
governments to clean up the situation
then exercise such supervision as would
prevent recurrence OF the present con-
dition Of affairs.
One large bond house, which had
issues of something like l. 900 Western
school districts. reports that almost 200
OF them were in default or arrears of
interest in January OF this year. A
municipality in Alberta with outstand-
ing bonded indebtedness O. over $780,
600, and which had not made a pay
mont even on interest account since
1917. recently effected an arrangement
with the creditors under which arrears
Of interest have been funded and the
interest rate reduced from TO 8 per
cent. In this instance the Alberta gov
crnment in effect has guaranteed pay
mcntS under the settlement scheme.
Two cities and eight towns in Sas-
katchewan have dcfaulted. Creditors
Of certain of the Western municipali-
ties and school districts complain that
they cannot get their claims dealt
With even to the extent Of compost
ton proposal. Some school district
officials ignore letters, while others
delay action cn himsy excuses.
The situation calls for a thorough
house cleaning and in many instances
rearrangement and in some cases prob
ably reduction Of the Indebtedness
or Of the rate of interest Sooner OF
later the problem may have 10 be dealt
with by the Provincial governments.
In the meantime, it is working injus-
t1ce not only to solvent municipalities
and school districts and to investors
but to the bond dealers as we'll. Ger
tam bond houses in Eastern Canada
which specialized in Western munic-
oped large home market for such
debentures and a profitable business
for themselves. Defaults have dis
credited securities OF this class in the
eyes Of investors and the bond men
have seen the work of wears almost
completely destroyed. Most of the
issues are thoroughly safe, but the
defaults Of a minority have caused
distrust OF all.
In Alberta the Municipal Finances
Commission provides the machinery
for dealing with cases of default
while the Saskatchewan Legislature
recently conferred upon the Provincial
Local Government Board special pow
ers to investigate and under certain
conditions to take over the administra-
ton Of municipalities which are in
financial difficulties. Both Provinces
however have been studiously careful
TO leave responsibility for any in.
debtedness at the door of the nunici,
pality by which il was incurred.