12 BULLETIN 393, U. S. DEPAE.TMENT OF AGEICULTUEE. 



ment. In consequence the financial burden rested at the outset 

 entirely upon the two districts named, although traffic from the other 

 two districts passed over the roads of these two in going to and 

 from Fredericksburg. In spite of these drawbacks, Courtland dis- 

 trict voted $60,000 and Chancellor district $40,000, and the bonds 

 were sold at intervals between February 8, 1910, and September 

 17, 1912. The first $18,700 issued carried 4| per cent interest 

 and the remainder carried 5 per cent interest, payable semi- 

 annually. All of the bonds were to run 30 years, but were callable 

 after 5 years. In aU cases the bonds brought par and accrued 

 interest. Callable bonds ordinarily do not bring as high a price in 

 the bond market as noncallable bonds which are payable at definite 

 periods. This indicates that the bonds were marketed shrewdly and 

 intelligently. Arrangements were made to secure 3 per cent interest 

 from the banks on sinking funds. Even then marketing of the bonds 

 would not have been accomphshed except for the loyal support 

 given by local investors. Furthermore, as pointed out in the pre- 

 ceding chapter of this bulletin, the combination of long-term and a 

 call provision leaves so much to the discretion of the local authorities 

 from year to year as to inject an element of uncertainty into the 

 matter of bond retirement and tax levies. It might readily occur 

 that when officials are in authority who are actuated by an eagerness 

 to get the district out of debt, an excessive tax rate would be levied 

 and the bonds called in at an unnecessarily rapid rate ; or the reverse 

 might be true if neghgent officials, or those who, for any reason, 

 might desire to hold the tax rate down to a minimum, should neglect 

 to call in bonds. The district then would carry the burden repre- 

 sented by the difference between the 3 per cent obtained on sinking 

 fund and the 5 per cent carried by the bonds. It would have been 

 better if a 5-30 year deferred serial bond had been adopted, as the 

 annual retirement then would have been fixed and^ the tax rate 

 subject to no wide fluctuation. 



Our subsequent investigations enabled us to see just what financial 

 steps were taken in connection "with the bond issues. As the bonds 

 were not callable until after 5 years, it followed that the first call 

 year was 1915. If it were intended that the payment on the debt 

 should begin in 1915 and extend to the thirtieth year the logical 

 plan for Courtland and Chancellor districts would be to pay off 

 $4,000 of the principal each year" from the sixth to the thirtieth year. 

 For the two districts for 1915 this would require an average rate 

 of 32.7 cents on each hundred dollars of taxable valuation for interest 

 and principal for the 30-year period. Of course this rate would 

 decrease as the assessment increased at 5-year intervals. 



The plan actually followed in Courtland district was to levy 40 cents 

 on the hundred dollars for 1910 and 1911; for 1912, 45 cents; for 1913, 



