Municipal Bankruptcy

Municipal Bankruptcy

To Washington fortnight ago trooped twoscore mayors of twoscore debt-ridden cities, all looking for Federal loans (TIME, June 5). Led by Boston's Curley, a delegation called on President Roosevelt, on Governor Black of the Federal Reserve, on Chairman Jones of R. F. C., on Vice President Garner, on Speaker Rainey. All they got was sympathy. The President was opposed to lending money to municipalities because 1) demand might quickly soar to ten billion dollars, 2) local governments would have to surrender their independence to Washington.

Last week President Roosevelt found another way to help insolvent cities. With his support legislation was drafted to bring cities within the scope of the new bankruptcy law for corporations and individuals. By this means a city might offer its creditors 60-c- on the $1. If three-fourths of them concurred, it could take its debt agreement into Federal court, have it made binding on all creditors, get a chance to make a fresh financial start.

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