The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1932-03-18
Credit Relief For
Cities Up To Banks
Congress Has Made Possible the Means; Banks Should
Do the Rest, Says Engineering Periodical

New York.--Ample means for
the unfreezing Of credit made vail
able by congress place squarely up
to the banking interests the obliga-
ton to relieve American municipal
tiles of the threat of insolvency
which menaces their credit, ties up
public works improvements, and
threatens civil employees through
out the country with unemploy-
ment, according to the. Engineer
ing News Record" Summarizing
the initial results of nationwide
study of the municipal credit sit
uation, the publication states that
the border line OF insolvency has
been reached in many American
communities almost wholly because
of collapse of the countrys money
system, rather than essentially
through the faults and shortcom-
ings of municipal governments.
Credit unfreezlng Is the Intent
of the measures recently enacted
by congress, and 1t should tend to
ease the severity of the 1882 NUM-
cipal crisis says the engineering
publication. Congress has now
placed ample means IN the hands
OF the banking establishment ana
IL the latter lives up to It's essentiai
RESPONSIBILITIES those means Will
become available to permit norman
continuance OF city operations as
we'll as improvement works, Ger
tain 1t is that no change In city
operating methods--such as tax
collection In advance Of eXpendi-
ture---can be accomplished rapidly
enough to save the day. The dan
ger is two-fold:, complete stoppage
of public works construction and
creation OF disastrous tidal wave
of unemployment In the ranks OF
public service, an eventuality that
can make an utter wreck OF the
reconstruction for which everyone
is laboring just now"
Cities in all sections OF the
country, the survey reveals, are
struggling to continue operations
with sharply reduced funds. The
morale OF their employees has been
badly shaken. stats have Deen
decimated. Salaries are reduced or
remain unpaid. Improvements nave
been halted. Properties are being
neglected and valuable facilities
left unused "a.
"These evil effects, though due
To the money and banking system
were accelerated by certain NUM-
cipal practices says Engineering
News il ecord. 1T has been the al
most universal custom OF cities 10
spend money before they COLLECTED
payment for their services IN the
shape Of taxes, Short-term panK
loans secured by future TAX pay,
ments made this possible: anu
banks, indeed were by no means
hostile to this procedure TOT
meant a stable income Tor tnem'
But to-day the security OF future
taxes on which the practice rested
IL under a cloud, and since az the
same moment the desire Tor almost
complete liquidity of bank funds
han risen TO astonishing helghts
,,sual short-term loans are dlilcult
10 obtain even on usurious terms
thew have been extended only re-
luctantly.
"Tax payments are In a bad way.
De1inouencies have increased to the
hieaest point In history. Not only
doeu the average home owner ma
tax payments at this time very
hard, but even those owners who
are able to pay look with such III
favor on taxes that some OF them
deliberately withhold their tax
payments. Naturally, then. the
banker feels doubtful whether his
loans are likely to be repaid
promptly. Naturally, also, he
seeks to improve conditions on the
city In order to make repayment
surer; and this means first OF all
such reduction of city expenses as
will make the budget balance.
balancing budgets these days
means not increasing the income
but cutting down on the expense
side. Moves Of this nature are ham,
pered. however, by the number of
irreducible items. A large part OF
the budget Is for debt charges,
which cannot be cut without de-
stroying the citys credit. Much of
the remainder IL for mandatory
items such as salaries tixed by
legislatures for police, fire and
school department employees. With
so many infiexible items. TO make
the cuts demanded entails meas
ures that are doing much to Grip
pie the vital service functions of
local government. Further, this
development comes at a time when
greater demands than ever before
are being made for unemployment