The midland journal. (Rising Sun, Md.) 1885-1947, 1933-04-28
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National Topics Interpreted "a fST7fTTT6A
by William Bruckart IAT1I1F
National Topics Interpreted
by William Bruckart


out doubt they run into good many
billions of dollars.
But now the day of reckoning is at
hand. Bonds must be paid off and re-
tired by many communities, or If the
principal is not due, there is yet the
interest to be met. And the treasures
are empty!
So it was only natural that the
theory of scaling down those debts
should be examined and in conse-
quence of this, Representative Wilcox,
of Florida, has introduced in the house
a bill providing for any subdivision Of
government to declare itself bankrupt
and ask the bankruptcy court to help
it arrange composition with its cred
itors. There is, of course, nothing new
or radical about that bill. It pre-
sents the only way out, both for the
communities which sold the bonds dur
ing its wild orgy of spending, and for
the investors who acquired the bonds.
In the case Of the community which
bonded itself, the bankruptcy court
presents way by which part of the
debts can be paid and the city's
finances, or whatever subdivision 1t
may be, can be arranged to meet new
conditions. In the case of the bond
holder. 1t is either 60 along with the
community in cooperative spirit,
share part of the loss and provide a
chance for the debtor to pay out, or
see the whole investment 60 up In
thin air.
With reference to the Wilcox bill, I
was told by a representative whose
district lies within
Might Hurt the city of New
City's Credit York that enactment
Of such legislation
would damage the credit Of that great
city. People would fear that its bonds
also would become worthless or that
they would have to accept a proposal
for composition of all claims, each
creditor taking proportionate share.
My answer was that any person hold
ing bond Of city or county or road
district school district or what not
cannot possibly be so blind as to avoid
seeing the true facts. If the city Of
New York can meet it's obligations, it
has nothing to fear; If it cannot do
so, why should it try to "kid" the
people? 4
l mention. New York as an example.
and because there are score of other
cities in the same situation. They
are not insolvent as long as the people
can pay the taxes laid upon them.
People are not paying taxes, however,
because they cannot do so, in many
scores of localities. So a thorough
study of the entire situation would
seem to force the conclusion that some
legislation such as the Wilcox bill Is
inevitable. Creditors must take half
a loaf as better than no bread at all.
The Wilcox bill proposes that when
a community is in default on its
bonds, 1t may seek the aid of the fed
eral court and negotiate an adjust
ment which, If it be acceptable to
three-fourths Of the creditors. calcu-
lated on the amount Of the claims or
bonds they hold, the other one-fourth
becomes bound by the court decision
or affirmation Of the agreement. The
bill would compel the taxing dictrict to
make preparation In advance for rails
ing revenue to pay off the revised debt
so that there could be some assurance
Of final settlement.
But the Wilcox bill is having its
troubles in getting onto the creased
runways of favored legislation. De-
spite the fact that the theory of 1t is
precisely the same as the Roosevelt
theory about scaling down debts owed
by farmers and by owners of homes in
town, there has been no nod of instruc-
ton from the White House thus far to
put the legislation through.
Few people in the country recog-
nize. how many cities, towns town.
ships and the vari.
Hundreds Gus kinds of districts
i'm Default have defaulted on
the payment Of IN
terest or principal or both. 1t is
condition that now has affected more
than 300 communities, and May and
June will see enormous additions to
that total for in those months there
are numerous bond issues on which
either the interest or principal ma
ture. and the issuing communities are
without funds to meet the obligations.
There are communities in Al states
right now where bond issues are In
default, and this appalling condition
shows no signs Of abatement
Truly. the politicians who cam
paigned for such things and who
claimed to be promoting great i'm
provements for the common good are
no longer in a position to serve their
communities
From pure curiosity, examined
some of the statistics for half dozen
or more communities whose bonds are
in default, and they showed the amaz-
ing result of total bond issues in one
~ txr,0 INSTANCES th0f woro Oroof