Debts & Delinquencies

P: Chicago, second U. S. city, could not pay its debts last week. The community had in the past mortgaged itself for 320 million dollars. Dec. 31 it was obligated to pay $11,312,928 on interest and principal. It lacked the money. It lacked cash to pay even school teachers, policemen, firemen, and other public servants. As a device to raise cash Mayor Anton Joseph Cermak with Board Chairman James Simpson of Marshall Field & Co. tried to sell $36,000,000 of "tax anticipation warrants." Few investors bought. For a third of the district's real estate tax is delinquent already. Banker Melvin Alvah Traylor scoffed: "There just isn't any market, and there isn't going to be. Any trustees today that would buy those obligations . . . would be guilty of bad faith. . . ."

In desperation Chicago and Cook County (the two corporations are practically identical, and Mayor Cermak as political boss controls both) last week tried to get Illinois General Assembly to invent some means of raising cash. The General Assembly dallied and adjourned without giving Chicago help. Snarled Mayor Cermak: "They had it in their power to remedy this situation. When they adjourned without giving relief, it simply scuttled the ship, and Chicago is sunk."

P: Philadelphia, third U. S. city, also could not pay its debts last week. City and county (they are practically identical) owed 600 million dollars on bonds. The community had enough money to pay its bank debts, but $1,625,000 less than enough to pay 26,000 employes their mid December wages. Mayor Harry Arista Mackey & staff tried to kite the city's pay checks by postdating them until Jan. 1, when Philadelphia could sell $2,000,000 in bonds to the sinking fund. The kited city checks were to be called "scrip." Banks refused to pour more money down the political sewer. Private banks, like Drexel & Co. (Morgan partnership) would loan nothing until city and county governments were merged, top-heavy governing overhead reduced. In desperation Mayor Mackey's council ordered a raid on the city's sinking fund. The sinking fund has 133 million dollars in banked cash and locked up bonds with which to pay interest and principal on long term community borrowings. Such sinking funds are for a specific purpose, should be financially sacrosanct. But desperate Philadelphia traded its Jan. 1 promise-to-pay to the sinking fund for cash to pay employes.

Clifton, Paterson and Passaic, N. J. have not paid their share of taxes to County and State. North Bergen, N. J. was utterly insolvent with a receivership in prospect if the State would pass an enabling law.

Various communities tried to borrow $27,367,240 last week. Some got their money. But the credit of others was so shaky that investors rejected the offerings outright or demanded usurious discounts. Among rejected offers last week were

Stamford, Conn.'s $750,000; Waterbury, Conn.'s $1,000,000; Schenectady, N. Y.'s $842,000.

So gloomy did the financial conditions of local governments seem to the nation last week that Milwaukee received kudos and headlines for laudable providence, because it announced that it had $7 city cash for each one of it's 578,249 inhabitants. This was achieved by a non-partisan Socialist administration which had been farsighted enough to economize.

Glencoe, rich suburb of Chicago, last week provided an example of drastic retrenchment. Schools were ordered not to open after the Christmas holidays. Unless citizens contribute cash and raise their injunctions against tax collections (their property is assessed at $17,000,000), they will have no police or fire protection after New Year's Day, and no street lights. If citizens are frugal they will have their garbage collected until Ground Hog Day, and if they are abstemious they may have water until Lincoln's Birthday, mayhap until Washington's.

Portland, Ore. and the four tax districts associated with it, however, last week displayed the approved pattern of retrenchment. Tax levies last year were $15,515,315.39. For 1932 various departments asked for amounts which would have totaled $15,901,940.70. But the budget supervisors lopped $414,944.72 off that which would under ordinary events have gone through. Consequently Portland citizens will be charged $28,319.41 less than during 1931. The chief of police and his detectives are going to do with the motorcars they now have. So will other car users. Irving Park will not. get a swimming tank. School teachers, who for medical reasons are allowed one teaching day off with full pay every month, must pay their substitutes themselves if they take the day off (a $70,000 school district economy).

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