The Waterbury Democrat., 1932-02-08
NEA Service Writer

Washington-This years federal deficit of two billion dollars has given the government plenty to
 worry about, but it has also had brought forcibly to it's attention the fact that American cities, including the very largest ones, have also been having serious financial trou- bles.
 New York and Boston vainly appealed to congress that munich palities be allowed to borrow from the Reconstruction Finance Cor poration, pleading Inability to bor- row on prospective tax collections. The plights of other cities, includ- ing Chicago, Philadelphia and De- troit, have been common knowl- edge.
 Although the many charges of graft, mismanagement and over spending by municipal govern ments are often Well-grounded, the cities, except perhaps in the case of Chicago, are not now in bad straits merely on that account. In fact, poor management is not in- frequently blamed for the fiscal troubles of the federal government and for the failure of many banks and business corporations.
 Nearly all cities and states have excellent records for paying off their obligations on time and their taxing powers and taxable prop critics have always been regarded as top-grade security. But now they are beset by many defaults on tax payments, defated property values which make property own CTS shiek at boom time assessments and the prospects of tax increases and, finally, a slump in the market for municipal bonds and short term loans coupled with unwillingness of bankers to load up with the ob- ligations at this time when liquid funds are considered so desirable.
 Many cities which find them selves unable to borrow are really in good financial condition. It is 6 normal practice to borrow in an- ticipation of tax receipts, as Mayor Walker of New York and Mayor Curley of Boston have pointed out. Suddenly deprived of the privilege. they become faced with possible breakdowns of city government. Curley reported indications that many banks in New England would refuse to make such short-time loans. He declared that while the reconstruction corporation was de- signed to support banks. "the inju- rious effects of the closing of finan- ..o # t1 tn artpo n in nowise be compared with the tre- mendous injury that will result if provision is not made for safe guarding the municipalities of America" He warned against dis astrous effects of any suspension of health, police, fire protection, well fare and educational activities.
 Although many cities have bor- rowed heavily in prosperous times, the condition of few is to be com pared with that of Chicago, whose finances went chaotic some time ago. Usually states and cities are not considered mainly responsible for recent declines in their bonds which make the obligations un- profitable or dificnlt for the bank CTS to handle. Nevertheless, mu- nicipal bankers have been demand- ing retrenchments and curtall- ments of expenses, notable exam ples having been observed In De- troit and New York.
 Congress did not refuse the re- construction finance bill for sup port of the banks, but 1t didn't dare take on the burden Of mu- nicipal financing, either. Senator Reed of Pennsylvania pointed to an already "serious condition in federal bonds" asserting that