Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-19
Chicago's Bankruptcy.

If any business establishment ran
its affairs on the same principles and
with the same unhappy results as the
City Of Chicago, to which reference
was made in these columns the other
day, it would 60 into bankruptcy Re-
ownership would be required, to effect
q Strengthening out of conditions, the
balancing Of assets with liabilities If
possible. But a municipality cannot
very well be placed in the hands Of a
receiver, nor can q State or a national
government. Short Of extraordinary
measures 1t must work out its own SAL
walton.
The trouble il Chicago started with
temporary shortage of revenues. The
budget had not been exactly balanced
Municipal budgets of the size of Chi
cago's rarely do balance precisely. The
city borrowed on its prospect of reve-
nues, somewhat as the prospective heir
to q fortune borrows on the strength
Of the money that will be his If, as and
when he inherits. But here the true
inprovidence Of the municipality came
into play. Instead of writing of an
equivalent amount from expenditures
for the next period, covered by the in
come to be, the budget makers went
ahead and wrote their acquisitions In
even larger amounts. And the next
season the process was repeated, with
the result Of creating an unauthorized
public debt, for the payment Of which
there was no funding provision.
The demoralising effect of this ir-
regular method Of running city has
now been manifested. Utter confusion
prevails. Questioned assessments have
tied up tax collections. The whole tax
and expenditure system is tangled up
into veritable Gordian knot. A citi-
zens' committee has been formed, with
out oficial authority, to ind a plan
for financial relief. It is headed by
Silas H. Strawn, who is one Of Chi
Cages most useful citizens, often called
upon to perform civic duties outside
Of the range of politics. He has now
stated that even II the taxes for 1928
and 1929 were all collected the city
would still be in debt $27,641 500.
This is . simple, plain case of living
beyond the means. Nobody will ever
know perhaps how much Of the excess
of expenditures over income has gone
in graft or municipal "racketeering."
The 1894 municipal employees who this
week will be In arrears Of salaries are
not concerned about the cause Of the
shortage. They want their money, and
there is no money to pay them.
Now comes the worst feature Of the
situation. Bonds and tax anticipation
warrants have been offered for sale by
the city as an extraordinary means of
providing immediate cash. Not one Of
the Chicago banks will take this
paper" In other words, Chicago has
not only lost its capital. but 1t has lost
its credit, for the reason that there Is
no faith In the integrity Of the NUM-
cipal administration, no confidence in
the ability of the mayor and the
councils, granting their willingness, to
repay debts incurred to meet this
emergency.
In these circumstances it would
seem to be within the power and to be
the duty Of the Governor Of the State
Of Illinois to name q receiver or a
commission Of receivership for what Is
30 clearly q case Of municipal bank
ruptcy, one Of the most shameful ex-
hibitions Of administrative incom-
petence In history.