The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-12-18
Trends
Credit of Chicago
Shows Distinct
Betterment.
, BY VINCENT S. LYONS
Times Financial Editor

THE credit Of the city Of Chi
- cago. which fell to a new low in
recent years, is showing definite
indications Of climbing once again.
Two distinct evidences of this
came to light in the last few days:
The sale by the Reconstruction
Finance Corp. Of SD 800 900 worth
Of bonds 70 Chicago banks for the
payment Of back salaries to school
teachers and the purchase by a
New York bank of 81 100000 of the
muRicipal's school tax warrants.
The deal with the New York
City institution constituted the
first time in four years that school
tax warrants Of the city have been
sought outside of Chicago itself.
True enough, the interest rate of
per cent attached TO the warrants
does not represent a credit rating
Of the first magnitude, but it is a
full l per cent lower than the
coupon last summer.
A more Illuminating barometer
is the RFC transaction. A syndi-
cate of all banks in Chicago par
ticipated in the deal and paid
101 and accrued interest for the
bonds. The fact that bonds of the
local government should be taken
at a premium of full point over
par is one of the best indicators
that Chicago's finances now are
the best they have been in years.
DIFFICULTIES in regard to
IL financing have been encoun-
tered by the Chicago Board of Edu-
cation ever since 1880, or shortly
after a $4,000, 900 issue of warrants
was sold throughout the country.
Almost Immediately on the heels of
this undertaking the investment
outlet for these securities damned
up and Chicago securities began to
depreciate in value.
The state of disrepute into which
outstanding securities fell made it
difficult for the city to sell new Sc
curities TO take care of its needs.
As a result the last few years wit
messed the spectacle of payless days
for school teachers and employees
of the school board. 1t was a de-
velopment that reacted unfavora-
bly, on the entire structure of mu-
nicipal finance.
Other communities throughout
the nation were not far removed
from Chicagos dire plight. Bank
ing sydicates called upon munich
palities to put their houses in or
der by the institution of economies.
In many instances these syndicates
issued a flat warning that unless
these savings were voted no new
money would be loaned to them
HEEDING this ultimatum,
II Mayor Kelly forced himself
into the picture. appointed some
new members of the school board
and called for economies. Even
after the maximum of savings had
been put into effect the board still
owed S26.300.0 900 III back salaries.
Any doubt that these savings meas
ures were not real was dispelled
within a short time when the RFC
granted a loan of S22,300,000 and
the sale of S4.000,0OO in war
rants to private interests was con-
summated.
AS a result of these two opera
lions the board was able to wipe
out all pay delinquencies and start
off afreSh. Several subsequent
sales of warrants have been made
in the interim at rate of per
cent.
The sale of s22.3OO,OOO worth of
bonds to Chicago banks by the RFC
are the same bonds which the Gov
eminent agency purchased last
summer to help the city out of its
vexatious prob I'm. The fact that
Chicago bank at the present time
are willing tc loan the city money
indicates that they feel more kindly
toward its financial condition.
Moreover, it is concrete indication
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