Document Type

Response or Comment

Publication Date



Statutes of Kansas authorized cities of the first class to carry out works of internal improvement and provide for payment of the cost thereof by issuing bonds of the city running no longer than ten years and bearing interest not exceeding five per cent. When conditions following the war made the marketing of five per cent bonds impossible at a price anywhere near par, the legislature enacted a new law authorizing the issuance of internal improvement bonds at six per cent interest, but requiring every such bond to contain a privilege of prepayment after five years from date. The city of Kansas City desired to undertake some internal improvements, but the money market had so far approached normal that five per cent bonds could be sold at a premium. The officers of the city did not know whether the effect of the new law was to repeal the old, thus making the prepayment privilege a necessary term in every bond to be issued, or whether it was an additional emergency statute applying only to bonds actually issued bearing interest above five per cent. They were anxious, if possible, to escape the prepayment restriction, for the privilege of shorttime prepayment was shown to operate in the sale of bonds as a discount of one-half of one per cent, which would entail a heavy loss upon the city. The state officers, who were charged with the enforcement of the state law, were equally anxious to prevent the city from doing this if it was in fact illegal.