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Show Bond Issues vs Interest The new crew taking over the ship of state is already feeling the pressures from the rough seas of finance and the gigantic waves of spending. Loans, grants, bonds, assessments, and new taxes have all been mentioned as means of getting new revenue to care for increasing in-creasing costs and new projects. That the new crew will succumb to all these pressures remains to be seen. But a pay as you go system isn't too bad for many a project. For those interested in the bonding bond-ing method of finance it might be pointed out that it has its drawbacks. draw-backs. Take for example the experience ex-perience of California as related in "We Bankers" by Andrae Nord-skog. Nord-skog. "In February, 1850, our State of California issued bonds in the sum of $934.40 to pay for a granite slab to be placed at the 120 foot level inside of Washington's Monument Mon-ument on the grounds of our National Na-tional Capitol. "On the slab is the following inscription: in-scription: 'California, Youngest of the Union, Brings Her Golden Tribute to the Memory of Its Father.' "Our Golden State issued short term bonds bearing interest at the rate of 36 annually. In 1873 new bonds, in the amount of $2,227,500 were issued to retire the original bonds. Since that time the state has paid over $10,-000,000 $10,-000,000 in interest but not one cent on the principal." Unless something has been done very recently the people of Calif, are still on the million dollar interest inter-est skids of a $934.40 bond issue. Hoover Dam was built at a cost of $160,000,000. But, the people paid $342,000,000. Why? Interest. Thomas Edison said "In all great bond issues the interest is always greater than the principal. All the great public works cost more than twice as much on that account." For those who are considering pushing bond issues to the fore as a means of financing upcoming projects we suggest a thorough study of interest. |