Evening star., 1932-08-14

cago making pitiful shift to
avoid starvation, while the au-
" thorities wrangle over the tax
angle; unpaid policemen in
philadelphia discussing reductions in
the salaries that are to the cops eye
but mystical symbols of memory and
hope; unpaid coupons on some bond
that was once fondly called a NUM-
cipal": the yelling and swelling of the
chorus of the tax burdened and the tax
frightened, who verge upon hySteria-
of such comes the notion, widely enter
tanned, that many American cities are
bankrupt, and that practically all OF
them are on the verge Of fiscal collapse.
So widespread has become this belief
in municipal insolvency that when
particular city finds itself still in black
ink on its ledgers it broadcasts the fact,
sometimes implying If not actually say
ing that it is the only solvent city IN
the country.
Then the proud solvency Of that par
ticular city is credited to some political
party, parsonage or device, 1t being
pretty clearly suggested that other cities
should initiate its example.
Thus Milwaukee, excellently managed
over a long period of years under the
guidance Of its Socialist mayor, Daniel
w. Hoan, suddenly finds that Its SOL
vency is news. Nobody. perhaps. says
directly that Milwaukee is the only SOL
vent city. but the story of its financial
yell-being is reflected against the black
shadow of the cities that are in diff
culties. The result is often thus ex-
pressed; milwaukee is solvent; Mil
waukee has a Socialist mayor; otner
cities may become solvent If they elect
Socialist mayors"
But Louisville is also solvent. Louis
vile has Republican mayor. Then IL
follows that if other cities desire to es-
cape bankruptcy, all they have 10 90 Is
to elect Republican mayor.
Richmond also is solvent. The mayor
of Richmond is Democrat. therefore, IL
follows, as night the day, that the cure
for municipal financial troubles Is 10
elect a Democratic mayor. =,
Cincinnati is solvent, too. II mas
CITY manager and a non-partlsan gov
eminent. The inexorable law OF logic is
called to witness that city that would
change its accounts from red INK 10
black has but to install city manager.
That is the situation.
The truth of the business is that most
American cities are solvent, and tnls oe-
spite the fact that few If any American
cities have escaped the devastating Ell
fects of the depression that has pro-
foundly disturbed municipal fiscal az
fairs in every country.
This does not mean that our munlcl-
pal finances are in such apple-ple order
that nothing need be done ABOUT ths
problem; the present situation ana lne
prospects for the immediate future-ot
decreased tax revenues and increased
demands for services-will require the
best efforts of every American city 10
maintain Solvency. But unless we re-
! member this basic fact of fundamental
solvency, and so long as we allow our
selves to become hysterical about th2
! "bankruptcy of our cities" which the
! prophets of gloom are proclaiming, we
cannot possibly be in the frame Of
mind to approach the difficult problem
sanely and to remember that the main
| tenance of municipal solvency cannot be
accomplished by mere adherence TO anV
national political party, to any particu-
/ lar parsonage or to any particular po-
| litical device.
| When we speak of city as solvent" ="
however. we must remember that the
word has no clear-cut meaning as 1t Is
| popularlv used in the discussion OF n1u-
nicipal affairs.
One may consider as solvent those
| cities that have been able to meet
promptly every payment of interest upon
| their public debt and every maturing
obligation-in other words, city that
has not defaulted in its debt service
may be called solvent.
| On this basis it appears that OF the
| 1911 American cities that have popula-
| ton Of so 900 or more, not more than
| II cities are in default or have been in
default at any time during the present
depression.
/ However, included In this number of
cities that may be regarded as solvent"
because they are not in default are a
number that have experienced great dlf-
ficulty in financing their current expen-
ditures, including Chicago, Philadelphia
and others whose municipal servants
have seen many payless pay days.
A more exacting definition OF the
phrase solvent cities" then. might IN
clude only those cities that have not
defaulted in respect OF their funded debt
and in addition thereto have been aple
to finance their current operations,
meeting pay rolls and operating ex-
| pense items as they come due.
Judged by this standard, the Verv
great majority of American cities still
are solvent.
A still more rigorous definition would
include as among the solvent cities
only those municipal governments that
are not in default, that have met
promptly all operating expense items
and that have balanced their current
budgets so as to meet, on the one hand
decreased revenues and, on the other
hand, the increased services necessi-
tated by the depression with respect te
relief, etc.
Even by this high standard, most OF
the American cities are sui soivent
even though some Of the services they