Evening star., 1940-07-13
DC. C.InterestCut
On nP.W.A. Loan
To.Save4Mi|Iion
Rate Is Reduced to
1.677%; Amortizing
Period Shortened

District officials had the green
light today for Inauguration Of q
plan that will save the municipal
government more than $4,000, 900 in
repaying the loan portion Of the
$18, 10000 District P. w. A. pro-
gram.
The path to this saving was
cleared late yesterday when Sec
retary Of the Treasury Morgenthau
notified the Commissioners that the
interest rate on the loan portion,
which amounts to $9,982 500, will be
reduced to 1677 per cent.
The Secretary's action was in &C.
cordance with a joint resolution
recently approved by Congress, au-
thorizing the Secretary to reduce
the interest rate on the loan to ap-
proximately the level at which the
District could obtain a bond re-
funding financing, and reducing the
period of amortization of the debt
from Is to Is years.
The total amount of interest to
be- paid by the District under tine
new plan will be 81 1892 ,O66, which
will make the total repayment to
the Public Works Administration,
including principal and interest,
amount TO $11,364, ,566.
Would Have Paid 15.5 Million.
Under the old plan, the District
would have been required to pay
the Federal Government total Of
SIS ,592, 1878 in principal and interest
on the approximately $4,000 900
loan portion. It was this fact that
led District officials late last year
to suggest a plan to permit the
Commissioners to refund the debt
through bank loans. The new plan
was worked out by the Budget Blu.
reau and approved by President
Roosevelt.
In announcing his decision, Sec
retary Morgenthau told the Com
missioners he believed the new rate
lis a fair rate of interest to be
included in the agreements between
the Public Works Administration
and the District of Columbia"
Under the bill approved by Con-
gress, the Secretary was authorized
to determine the new rate OF in
terest which in his opinion would
be "the lowest interest rate avail
able to the District of Columbia
were said District authorized by law
to issue and sell obligations to the
public at the par value thereof, In
a sum equal to the repayable
amounts of such loans and advances,
maturing serially over period of
Is years in approximately equal an
nual installments, including both
principal and interest, and secured
by first pledge of<and lien upon
all the general fund revenues of
said District
$800,000 Available.
The District now has available,
in the supply bill for the new fiscal
year, sum of 100000 to make the
first payment on the debt The first
payment, according to Secretary
Morgenthau. will be $757,516, which
includes an interest charge OF
$142,516.
1t was Engineer Commissioner
David McCoach, jr., who first saw
the possibilities of effecting a big
saving in the repayment of the
loan, but the lowest interest rate
anticipated by him was per cent,
which he estimated would save the
District possible s2,5O0,000.
President Roosevelt was sympa-
thetic to Col. McCoach's suggestion,
but said he felt the District should
not depart from its pay-as-you- go
principle. In approving the new
plan, however, the President said
he felt the District was entitled to
as low a rate of interest as 1t could
have obtained by borrowing the
money from the public.