Municipal Debts and Expenditures

June 13, 1932

Report Outline
Breakdown in the Credit of American Cities
Pre-Depression Growth of City Expenses and Debts
Current Reports to Deflate City Expenses and Debts
Problems of Future Control of City Finance
Special Focus

Breakdown in the Credit of American Cities

Many American cities have abandoned attempts to dispose of issues of bonds within the last two or three months because of unsatisfactory bids. In nearly all of the larger cities more or less drastic cuts have been made in governmental expenses. The treasurer of Cook County, Illinois, announced on May 30 that the county must default, June 1, on about $900,000 bonds and interest, because of tax delinquencies and the failure to find buyers for $5,000,000 worth of tax anticipation warrants. It was also stated that only 41 per cent of the 1930 taxes for Chicago and Cook County had been collected—a delinquency amounting to about $99,000,000.

A list prepared in March, 1932, showed 122 cities and 104 counties, townships, irrigation districts, drainage districts and other improvement districts in 31 states had been reported in default as to principal or interest on their bonded debts at some time during the previous five years.

The Breakdown in Municipal Credit

In October, 1931, according to Sanders Shanks, editor of The Bond Buyer, “bank credit, so far as dealers in bonds were concerned, dried up almost completely, which made it impossible for dealers to underwrite new [municipal] issues and it was very soon realized that the banks were no more ready to lend money to cities on temporary loans than they were to finance the dealers' bond underwriting operations.”

ISSUE TRACKER for Related Reports
Economic Crises
State, Local, and Intergovernmental Relations