The Adjustment of Municipal Debts

January 2, 1934

Report Outline
Defaults by Municipalities Since 1929
Congressional Efforts to Relieve Municipalities
State Aid to Defaulting Municipalities
Bonded Indebtedness of American Municipalities
Special Focus

Defaults by Municipalities Since 1929

Defaults by more than 1,200 American municipalities and other political subdivisions since the current depression began, involving in all about $1,500,000,000 of the $17,250,000,000 to $18,500,000,000 outstanding in municipal and local securities, have led to a series of proposals the last year for federal legislation to assist cities and towns in default. Following extensive hearings last spring before the Committee on the Judiciary of the House of Representatives, the advocates of federal legislation for the relief of municipalities agreed upon the Sumners bill for composition of municipal debts, which passed the House on June 9, and which is now in the hands of the Senate Judiciary Committee. A vigorous fight for its adoption is to be made in the Senate at the present session.

In the opinion of the Municipal Securities Committee of the Investment Bankers Association, the municipal default situation has not improved since Congress adjourned last June. “More communities now face the necessity of a debt readjustment,” the committee reported to the convention of the Association on October 29, “and there seems to be little prospect of accomplishing it without federal bankruptcy court machinery.” The committee urged all persons interested in the passage of the measure to work aggressively in its behalf.

The Financial Plight of American Cities

Until 1929 few municipal defaults had occurred in this century, but four years of financial stress have resulted in a situation similar to that in the depression of the 1890's. Many factors serve to confuse the problem, according to Clifford W. Ham, director of the Atlantic City Survey Commission, including dwindling cash receipts from taxes, impounding of city funds in closed and restricted banks, loss of credit for current financing, as well as inability to meet interest and bond maturities.

ISSUE TRACKER for Related Reports
New Deal, Great Depression, and Economic Recovery
Feb. 20, 2009  Public-Works Projects
Jul. 25, 1986  New Deal for the Family
Apr. 04, 1973  Future of Social Programs
Nov. 18, 1944  Postwar Public Works
Apr. 12, 1941  Public Works in the Post-Emergency Period
Mar. 08, 1940  Integration of Utility Systems
Feb. 26, 1938  The Permanent Problem of Relief
Jun. 08, 1937  Experiments in Price Control
Jan. 05, 1937  Credit Policy and Control of Recovery
Nov. 27, 1936  New Deal Aims and the Constitution
Oct. 16, 1936  Father Coughlin vs. the Federal Reserve System
Sep. 25, 1936  Roosevelt Policies in Practice
Feb. 11, 1936  Conditional Grants to the States
Dec. 11, 1935  Capital Goods Industries and Recovery
Sep. 25, 1935  Unemployment Relief Under Roosevelt
Jul. 17, 1935  The R.F.C. Under Hoover and Roosevelt
Jul. 03, 1935  Six Months of the Second New Deal Congress
Jun. 04, 1935  The Supreme Court and the New Deal
Mar. 05, 1935  Public Works and Work Relief
Feb. 16, 1935  Organized Labor and the New Deal
Dec. 04, 1934  Rural Electrification and Power Rates
Oct. 26, 1934  Federal Relief Programs and Policies
Jul. 25, 1934  Distribution of Federal Emergency Expenditures
Jul. 17, 1934  Debt, Credit, and Recovery
May 25, 1934  The New Deal in the Courts
Mar. 27, 1934  Construction and Economic Recovery
Mar. 19, 1934  Price Controls Under N.R.A.
Feb. 15, 1934  Federal Promotion of State Unemployment Insurance
Jan. 10, 1934  Government and Business After the Depression
Jan. 02, 1934  The Adjustment of Municipal Debts
Dec. 12, 1933  The Machine and the Recovery Program
Dec. 05, 1933  Winter Relief, 1933–1934
Nov. 11, 1933  Power Policies of the Roosevelt Administration
Oct. 28, 1933  Buying Power under the Recovery Program
Oct. 19, 1933  Land Settlement for the Unemployed
Sep. 20, 1933  The Capital Market and the Securities Act
Jul. 18, 1933  Public Works and National Recovery
Jul. 01, 1933  The Plan for National Industrial Control
May 03, 1933  Economic Readjustments Essential to Prosperity
Apr. 26, 1933  Government Subsidies to Private Industry
Mar. 25, 1933  Rehabilitation of the Unemployed
Feb. 17, 1933  Federal Cooperation in Unemployment Relief
Nov. 16, 1932  Systems of Unemployment Compensation
Nov. 09, 1932  Policies of the New Administration
Aug. 18, 1932  Emergency Relief Construction and Self-Liquidating Projects
Dec. 28, 1931  Relief of Unemployment
Aug. 01, 1931  National Economic Planning
Jul. 20, 1931  Dividends and Wages in Periods of Depression
Feb. 19, 1931  Insurance Against Unemployment
Jan. 19, 1931  Business Failures and Bankruptcy Administration
Jan. 01, 1931  Federal Subsidies to the States
Dec. 08, 1930  Federal Relief of Economic Distress
Sep. 25, 1930  The Extent of Unemployment
May 16, 1930  Politics and Depressions
Dec. 20, 1929  The Federal Public Works Program
Jun. 08, 1929  The Federal Reserve System and Stock Speculation
Apr. 14, 1928  The Federal Reserve System and Price Stabilization
Feb. 25, 1928  The Federal Reserve System and Brokers' Loans
State, Local, and Intergovernmental Relations