222 MASS. EXPERIMENT STATION BULLETIN 256 



is again declining. The ratio of total State and municipal debt to assessed val- 

 uation has dropped from 6.38 per cent to 4.92 per cent between 1910 and 1926, 

 indicating that for the state as a whole, loans have not been excessive. How- 

 ever, in individual cities and towns the ratio of debt to assessed valuation has 

 been increasing. This increase is explained by low assessed valuation in some 

 instances; in others, it reflects greater optimism on the part of taxpayers or 

 their officials. 



The ratio of outstanding debt to annual expenditures is another measure 

 of indebtedness. In 1910 the net outstanding debt was more than double the 

 total expenditures for that year; in 1925 net debt was slightly less than total 

 expenditures. The declining ratio of debt to expenditures indicates that for the 

 state as a whole borrowing has been conservative, or it may even indicate that 

 borrowing has not been equal to needs. 



Individual cities and towns have not all followed such a conservative policy. 

 The diflference between cities and towns is shown by Table 50. 



Table 50. — Ratio of Net Debt to Assessed Valuation, 1926 

 Group General Debt 



Cities 3.26 



Towns over 5,000 2.37 



Towns under 5,000 1.14 



Apparently the ratio of debt to valuation tends to increase with the size of 

 the town or city, due partly to the legal restrictions on indebtedness of small 

 towns. Since enterprise debt is usually for the purpose of acquiring or ex- 

 panding a self-supporting gas, electric, or water plant, the variations in enter- 

 prise debt between cities are not especially significant. 



Diflferences between individual cities and towns are much greater than the 

 above table indicates. Thus for the 39 cities, the ratio of total debt to valua- 

 tion in 1926 varied from 1.54 per cent in Somerville to 6.01 per cent in Revere. 

 Excluding enterprise debt, the ratio of general debt varied from 1.25 per cent 

 in Lawrence to 5.48 in Revere. Differences for the 39 cities were as follows: 



Ratio of General Debt 



to Assessed Valuation Nwmber of Cities 



(Per cent) 



1.00-1.99 7 



2.00 - 2.99 10 



3.00 - 3.99 15 



4.00 - 4.99 6 



5.00 - 5.99 2 



There is no relation between the size of the city and the ratio of debt to 

 assessed valuation. 



For towns of more than 5000 population, the range in the ratio of debt to 

 valuation is greater than for cities. Ten towns have ratios above 5 per cent, 

 and in 17 towns the ratios are less than 1 per cent. There is apjjarently little 

 relation between size of town and ratio of debt to valuation in this group. 



Since cities and towns assess property at varying percentages of value, the 

 ratio of debt to valuation is not as significant as it would be if assessment 

 practices were uniform. For some purposes, the net debt per capita is a better 



