USA > Ohio > Cuyahoga County > Cleveland > History of the city of Cleveland : its settlement, rise and progress > Part 18
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34
** A large amount was afterwards raised by private subscription.
Western Biogl Pub Co
273
HISTORY OF CLEVELAND.
This was, so far as the records show, the last attempt made to draw money from the city treasury for purposes other than for which it was collected.
Affairs in the City Treasurer's department had been con- ducted in unison with the manner of the other depart- ments, and no attempt whatever seems to have been made or thought of, whereby the city shc uld be placed on a footing which its solvency and ability to meet its obligations en- titled it to in financial circles. When money was required temporary loans were made, for the use of which ten per cent. was demanded and cheerfully paid. Frequent emer- gencies were met by frequent loans, and a history of the epoch, if such a history could be compiled, would be an interesting chapter to the student in finance. In 1869 Mr. - S. T. Everett was elected City Treasurer, and immediately thereon a new order of things was inaugurated.5 Educated and trained as a banker, Mr. Everett brought to the office a knowledge and experience which were invaluable, and which during the fourteen years of his incumbency were instrumental in placing the city's credit upon a secure foundation, enabling it to negotiate its bonds on excep- tionally favorable terms, Mr. Everett himself negotiating the securities at the eastern money centers, 6 The ten per cent. temporary loans were at once called in and the money secured at seven per cent., and during Mr. Everett's admin- istration Cleveland city bonds became "gilt edged" secur- ities, and brought higher rates than those of any other city in the west. 7
. When the perplexing questions arising from the struggle made by property owners against the assessments for spe-
274
HISTORY OF CLEVELAND.
cial improvements confronted the city's officials, and it be- came necessary to meet a novel emergency, Mr. Everett did not hesitate to stand by his convictions, and in con- junction with the auditor carry out a policy which, while possibly not within the literal purview of the law, unques- tionably saved to the city thousands of dollars in interest, and that too when adherence to the strict letter of the law would have relieved him of much labor and responsibility, and indirectly have inured to his profit. 8 . .
Mayor N. P. Payne, during his term of office, 1875 and 1876, gave much time and consideration to the city's finances, and the impress of his knowledge, experience and judgment may be found in many pages of the current record of his day and generation.
The debt of the city has, in its growth, been in a fair ratio with the increase in population, and the consequent aug- mented demand for enlarged facilities, greater conveniences. and added luxuries, as a close study of the question will show. An unusual increase of the debt in any given year, period of years, will be found to follow a period of very or apparent inactivity, and it is altogether fair to assume that the inactivity was rather the result of a policy which ignored the needs of the hour, in the matter of improve- ments, than one of unusually wise or economical adminis- tration. While it is true that the charge of extravagance may, in some instances, be 'well grounded, and the fact conceded that the municipal coffers have been despoiled of many dollars by the action of its own citizens in taking advantage of the unpardonable carelessness and reprehen- sible ignorance of officials in the matter of special assess-
275
HISTORY OF CLEVELAND.
ments, levied for street openings, extensions etc., yet it must be admitted that, taken in its entirety, the debt has been well earned and a fair quid pro quo secured. In no instance has the debt been increased by the dishonest prac- tice, or to the personal profit of an official.
A comparison of the debt of this with that of other cities will probably place the matter in a clearer light than any array of figures, compiled wholly from the ledgers at the City Hall, could do, and to that end the following com- parative statement of the debt, per capita, is taken from the Auditor's Annual Report, 1878 :
Boston
1877
$ 83
Cambridge, Mass.
1877
86
Worcester, Mass.
1877
59
Portland, Me
1877
144.
Hartford, Conn
1877
78
New Haven, Conn
1877
15
Providence, R. I
1876
66
Albany, N. Y
1877
41
Baltimore, Md.
1877
78
Brooklyn, N. Y
1877
73
Rochester, N. Y
1877
62
Buffalo, N. Y.
1877
58
Cleveland, O
1878
24
Cincinnati, O.
1877
88
Toledo, O
1877
70
Detroit, Mich.
1877
23
Louisville, Ky
1877
45
Milwaukee, Wis
1877
22
Chicago, Ills
1877
4.3
St. Louis, Mo
1877
51
It will be seen from this that the city's debt was very much below the average of that of the twenty cities
276
HISTORY OF CLEVELAND.
named; the average per capita being over $60, or two and a half times greater than that of Cleveland. The debt was then at its maximum point, being but $200,000 less than the highest point ever attained. On the basis of a present population of 225,000 the debt per capita, Janu- ary 1, 1887, is $36.42.
By a somewhat unique schedule, embodied in the annual message of Mayor W. G. Rose, presented to the City Council April 15, 1878, the assets of the city are enumer- ated as follows :
Armory and lot .. $ 20,000.00
Bridges and appurtenances 293,000.00
Canal lands. 300,000.00
Fire department, real estate and equipments
368,870.00
Infirmary farm and improvements. 163,673.00
Lake View Park.
307,396.00
Land, forty-three miscellaneous parcels 79,604.00
Market grounds and buildings.
156,295.00
Police department, real estate and equipments 157,268.85
Pest-House and farm
30,000.00
School department, real estate and equipments.
1,590,654.00
Viaduct.
2,135,000.00
Water-Works, real estate and equipments. 2,392,029.00
Work-House, grounds, buildings and equipments. 231,633.00
Total.
$8,225,422.85
To which should have been added the value of the securi- ties and other assets held by the Sinking Fund Commis- sioners, to wit: $2,109,357.21, making a grand total of $10,334,580.06. The general bonded debt of the city at the time was $6,061,000.00.
The total indebtedness of the city, including bonds, city
277
HISTORY OF CLEVELAND.
notes and certified estimates outstanding, and the amount of overdrawn balances, on the first day of January of the years named, is here given :
1872 $4,130,506.11
1873 5,550,648.48
1874
6,016,093.36
1875
7,941,832.00
8,957,702.38 1876
9,442,572.56 1877
9,358,831.26 1878
9,539,836.84 1879
1880.
8,751,595.10
1881
8,066,938.80
1882
7,343,419.11
7,120,213.56 1883
7,051,361.62 1884
1885
7,313,997.55
1886
7,774,179.30
8,195,842.51 1887
The present debt of the city, July 1, 1887, is $8,327,- 449.82;9 a decrease of $1,212,387.02 from the highest point reached, 1879.
ยท The bonded debt is divided as follows :
Water-Works
$1,775,000
Funded Debt 1,909,000
Infirmary 6,000
Monumental Park
30,000
Lake View Park 285,000 Wade Park 7,000
Canal
275,000
Viaduct.
2,138,000
Kingsbury Bridge.
215,000
General Bonds
250,000
278
HISTORY OF CLEVELAND.
School
85,000
Elevated Roadway.
335,000
Pearl Street Bridge.
10,000
Total General Bonds 7,320,000
Street Improvements.
383,000
Street Damages.
36,000
Sewers.
276,800
Total
$8,015,800
These bonds are payable, as follows :
1887 $629,800
1888
316,800
1889
550,600
273,000 1890
1891
309,000
1892
679,700
1893
585,000 1894
637,000
1896
802,000
1897
751,000
1898
698,000
1899
125,000
1900
365,000
1901
235,000
1902
210,000
1903
100,000
1904
125,000
624,000 1895
The general indebtedness was largely augmented by an apparent ignorance of the statutory requirements relating to assessments for special improvements, and by a repre- hensible failure to provide a prompt and adequate means for collecting assessments when made, on the part of the proper authorities. This ignorance and failure, added to
279
HISTORY OF CLEVELAND.
the cupidity and moral turpitude of certain interested property owners, who did not hesitate to stultify them- selves (to use a mild term) when called upon to give evi- dence as to the assessable value of their property, resulted in throwing upon the city at large a debt which these prop- erty owners were fully obligated, in equity, to pay.10 On an aggregate assessment of $1,591,019.60, made on prop- erty benefited by special improvements, the collection of $1,052,668.51 was enjoined by the courts on the petition of the property owners. Of the amount enjoined $373,- 153.10 was on account of the Payne avenue opening, an improvement of questionable or at best trifling benefit to any one aside from the property owners through whose lands the street was laid, who petitioned for the improve- ment, were persistent and industrious in urging the passage of the necessary measures to carry it into effect. and quite as quick to bring every technicality into play to escape payment and place the burden upon the public at large. The same may be said of the Sheriff street opening, and others of the seventeen special im- provements, the collection of the assessment for which was enjoined. The general bonded indebtedness of the city was increased to the amount of $1,027,435.98.11 The passage of the "Burns Law," in 1876, fortunately put a stop to further blunders on the one hand and rank inconsistency on the other. 12
The city having loaned its credit in good faith was legally . and morally bound to meet its obligations, and could not set up the claim that her own citizens sought to defraud her, as a bar against the claim of her creditors. The
280
HISTORY OF CLEVELAND.
bonds for special improvements had been issued and must be paid on maturity. The means for this purpose having been cut off by the suits of injunction, other means must. be provided. In the auditor's report for 1877 nearly all the special improvement accounts show a deficiency, marked overdrawn. The uncertainty as to the final de- cision of the courts was a disturbing element, which still further complicated matters. There was but one of two courses to pursue; to make another issue of bonds for the full amount of the obligations so unexpectedly cast upon the city, or to use the balances lying idle in the treasury. Whether wisely or not the latter course was pursued, at first as a temporary expedient, and then pursued year after year, in the vain hope and expectation that the cases in court might be settled or terminated, or that other means might be provided for canceling the obligation. The City Auditor and Treasurer in assuming this responsi- bility, which they did in the conviction that a very con- siderable portion of this debt would remain as a charge against the city at large, did so with the full knowledge and concurrence of successive mayors, finance committees and City Councils, all having been fully informed of the existence and character of these obligations, so unexpect- edly cast upon the city. 13 They were consulted as to what was the best course to pursue and concurred in the views of the auditor and treasurer. On this subject the auditor says in his annual report for 1877: "The saving to the city in interest alone by thecourse pursued, instead of issu- ing new bonds, has not been less than $35,000 a year for six years since 1872, or about $210,000 in all, as an aver-
281
HISTORY OF CLEVELAND.
age of $500,000 has been carried along for the entire period. No person or fund has ever been wronged or in- jured by the procedure, even though its lack of regular legal authority is admitted.
Let it be distinctly affirmed, in order to correct all mis- statements in the past and all misapprehensions for the future, that no warrant has ever been drawn upon the treasury by the City Auditor, nor any money ever paid by the City Treasurer, for the management of the floating special improvement debt, or for any other purpose, ex- cept by the direct authority of an ordinance of the Council, signed and recommended by the Finance Committee."
Subsequent events fully confirmed the views of the offi- cials, the city at large being compelled to pay no less than $1,027,435.98 on this account. (See Note 11.) The wis- dom of the course pursued cannot, in the light of the results, be questioned, as the interest alone on the bonds, had any been issued, would have been a heavy burden.
The issue of bonds has ever been a subject of deep con- sideration on the part of officials having in charge its fidu- ciary interests, and each succeeding administration has placed itself on record in this particular phase of the problem. Succeeding mayors have enunciated their views in well rounded periods, and have, so far as their powers enabled them, with more or less consistency, adhered to their views in the practice; but the influence wielded by the mayor in shaping affairs, either in directing or con- trolling its finances or in the management of any depart- ment, is so limited as to be virtually without force, and, as a consequence, his announcement of a policy conveys no
282
HISTORY OF CLEVELAND.
promise of development, and no credit or blame can justly attach to that officer, be the result what it may. Under such circumstances, and in the absence of any well defined uniformity of practice in any given period, or of any radical change inaugurated at any particular epoch, we must conclude that the legislators and executives have devoted themselves rather to the question of providing the improvements demanded by a great community than of devising means to pay therefor. Shall the coming gen- erations be called upon to pay in whole or in part for pub- lic improvements, the benefit of which they shall enjoy as well as we, remains an unsolved problem.
Any history of the finances of Cleveland would be incom- plete without reference to what is known as the "Sinking Fund of 1862,"14 a brief review of which is here given. . This fund had its birth in the early days of municipality, and those who laid its foundation builded better than they knew.
Empowered by an act of the Legislature, passed in 1846, the city subscribed for $100,000 of stock in the Cleveland, Columbus & Cincinnati railroad; in 1849 a second sub- scription of a like amount was authorized, and in the same year $100,000 was subscribed for stock in the Cleveland & Pittsburgh railroad.
In 1851, by the same authorization, $100,000 in the stock of the Cleveland, Painesville & Ashtabula railroad was subscribed for. These several investments were paid for in Cleveland city bonds. On the first of May, 1862, at which date these stocks were placed in the custody of
283
HISTORY OF CLEVELAND.
the Sinking Fund Commissioners, the nominal assets were :
Cleveland, Columbus & Cincinnati R. R $ 26,277 29
Cleveland & Pittsburgh R. R 102,964 04
Cleveland, Painesville & Ashtabula R. R. 232,136 19
Total $ 361,377 52
The result of the transactions in each instance, up to the date named, being as follows :
C. C. & C. R. R.
EXPENSES.
City Bonds issued $ 200,000 00
Interest on same, paid by city 24,800 00
Total outlay. $ 224,800 00
RECEIPTS.
City Bonds issued for the C. C. & C. R. R. Co., paid by
them. $ 200,000 00
City Bonds issued for the C. & P. R. R. and paid by the C.
C. & C. R. R. Co. 114,606 41
Other assets turned over to the Sinking Fund Commis-
sioners
26,277 29
Total Receipts.
$ 340,883 70
Profit on the investment in fourteen years. $ 116,083 70
C. & P. R. R.
EXPENSES.
City Bonds issued for stock. $ 100,000 00
Interest paid by the city, known and estimated 37,193 59
Interest paid by C. C. & C. R. R. from its dividends 14,606 41
Interest paid by C. & P. R. R.
8,200 00
Total outlay.
$ 160,000 00
RECEIPTS.
Stock sold by Commissioners $ 42,537 50
Amount realized from dividends. 8,200 00
Total Receipts $ 50,737 50
284
HISTORY OF CLEVELAND.
Difference between the investment and the receipts $109,- 262.50. The actual direct loss to the city, however, was not all of this, but was comprised in the sum of the two items of the taxes paid for interest, and the discount on the bonds sold, or $94,655.59; the remainder being the loss of the Sinking Fund, and of course, indirectly, that of the city.
C. P. & A. R. R.
EXPENSES.
City bonds issued. $200,000.00
Discount paid on the bonds 2,000.00
Total expenses. $202,000.00
RECEIPTS.
City bonds paid. $200,000.00
City stock in possession at par. 178,520.00
Other assets, excluding a claim of $33,415.41 on a New York depository which had failed. 20,200.78
This stock being at the time largely above par was worth probably $220,000, making a total in receipts of $398,720.78, and a direct profit upon the investment of $196,720.78 is shown.
The first annual report of the commissioners, January 1, 1863, showed a reduction in their nominal assets amount- ing to $29,218.45, which is accounted for by a sale of the stock of the city in the C. & P. R. R., but no real loss, as the stock when sold, in November, 1862, brought about twice as much as its quotations in May, 1862, when the Sinking Fund Commissioners took it in charge. The further progress of the fund, under the able and judicious management of the commissioners, and its remarkable increase from 1863 to the present time is briefly noted by
285
HISTORY OF CLEVELAND.
giving an abstract of its successive annual amounts dur- ing the period :
January 1, 1863
Total cash and assets.
$ 332,059 07
66
1864
422,203 36
66
1865
470,858 91
1866
66
569,143 59
1867
66
597,272 73
1868
66
66
1,146,100 68
1871
66
1,209,860 93
6
1872
66
1,311,550 79
1873
1,551,106 41
1874
66
1,688,793 79
66
1875
1,761,543 44
66
1876
66
1,989,751 84
1878
2,109,357 21 *1,816,690 53
1881
65
66
1,596,265 53
66
1882
1,252,849 02
66
1883
1,121,602 12
1,072,772 57
66
1885
66
66
1,134,181 29
66
1887
66
1,905,155 47
66
933,923 78
1,008,838 59
1,863,736 41
1879
1880
66
66
1,928,742 50
1884
1,102,187 89
1886
Of this fund $925,000 was pledged, originally, to the redemption of outstanding Water-Works bonds, and the unpledged balance to such public purpose as the trustees of what then, 1862, constituted that portion of the city
* The first payment from the fund, as provided by law, was made in July, 1878, being $450,000 for the redemption of maturing Water-Works bonds.
1877
1869
1870
286
HISTORY OF CLEVELAND.
located on the east side of the river-"the first seven wards." Payments have been made from the fund to January 1, 1887, as follows :-
Cleveland City Water-Works bonds $ 925,000 00
Other Cleveland City bonds and debts 487,963 75
City's proportion for repaving streets 463,191 72
Appropriation for fire-boat. 29,000 00
Total $1,905,155 47
The following items constitute the Sinking Fund of 1862 January 1, 1887:
2,300 shares capital stock L. S. & M. S. R'y, par value ..... $ 230,000 00 Cleveland city 6 per cent. Water-Works bonds, par value ... 637,000 00 Chicago & Atchison Bridge Company 6 per cent. bonds, par value. 94,000 00
Chicago & North-West Railway 7 per cent. bonds, par value 50,000 00
Cash on deposit 79,069 82
Total assets.
$1,090,069 82
The act of the Legislature, authorizing the issue of bonds for the construction of the Viaduct, made it the duty of the City Council to create a Sinking Fund within two years from the passage of the act "for the purpose of providing means to pay the principal of all bonds issued by authority of this act." In conformity with the pro- visions of this act, an ordinance was passed creating the "Viaduct Sinking Fund."
The cash placed to the credit of this fund the first year, 1879, was as follows:
287
HISTORY OF CLEVELAND.
Received of City Treasurer, proceeds of levy $50,709 57 Interests on deposits. 447 65
Payment of temporary loan 7,290 02
Interest on same. 56 32
Interest on $265,000 Valley Railroad bonds. 2,083 70
Total
$60,587 26
The cash disbursements during the year were :
Temporary loan. ... $ 7,290 02
Purchase of 500 shares of stock, Kalamazoo, Allegan & Grand
Rapids Railroad Company. 50,000 00
Total. $57,290 02
The first annual report of the Fund Commissioners, Jan- uary 1, 1880, shows the following assets on that date:
500 shares of K. A. & G. R. R. R. stock $ 50,000 00
Valley Railroad 7 per cent. bonds 265,000 00
Cash on deposit 3,297 24
Total. $318,297 24
The total cash and assets of the fund on the first day of January of each year have been as follows :
January 1, 1880. $318,297 24
1881 359,798 98
1882 389,030 67
1883 420,110 12
1884 478,108 58
1885 534,050 11
1886 587,471 36
1887 636,878 05
The Viaduct bonds, to the payment of which this fund stands pledged, mature as follows:
288
HISTORY OF CLEVELAND.
$148,000 00 1893
270,000 00 1894
1895. 300,000 00
1896 500,000 00
1897 225,000 00
1898
570,000 00
1907
125,000 00
That the fund will be amply sufficient to fully meet the purpose for which it was created there can be no doubt.
In 1879 the funds remaining in the hands of the city treasurer as the proceeds of the annual tax levy made for the redemption of maturing city bonds, were placed in the custody of the Sinking Fund Commissioners and is now designated as the "General Sinking Fund." The only rev- enue derived is interest on deposits, as the constant demand made on the fund precludes investment. January 1, 1887, this fund was credited with a cash balance of $5,065.00.
In December, 1885, an ordinance was passed by the City Council, which provides that "the surplus of water rents above the cost of conducting, managing, repairing and extending the Water-Works, as said surplus may be declared by the trustees of Water-Works, shall be paid over to the Sinking Fund Commissioners, to be by them held, invested and managed as a 'Water-Works Sinking Fund,' which moneys so held, together with their earnings, shall be applied, from time to time, to the payment of the maturing interest and principal of the Water-Works debt, etc." In conformity with the foregoing, the sum of $75,000 was paid to the Sinking Fund Commissioners February 7, 1887.
289
HISTORY OF CLEVELAND.
But a slight idea of the labor involved in making up the records and accounts in the city's department of finance could be given by any written description of the system.15 The grand ledger in the City Auditor's office contains no less than seven hundred and seventeen open accounts, two hundred and ninety representing the general and special funds and other general accounts, and four hundred and twenty-seven individual accounts; from these accounts are compiled annually and presented to the City Council the elaborate tables, seventeen in number, as follows :
A general exhibit of resources and disbursements in 1886.
An analysis of resources of each general fund for 1886.
A comparison of ordinary expenses paid from the follow- ing funds for 1885 and 1886.
The condition of each fund and account January 1, 1887.
The municipal levy for each general fund in the tax of 1886, and comparison with that of 1885.
Amount and proceeds of all bonds issued in 1886.
Amount and maturity of general bonds outstanding January 1, 1887.
Amount and maturity of street improvement bonds out- standing January 1, 1887.
Amount and maturity of street damage bonds outstand- ing January 1, 1887.
Amount and maturity of sewer bonds outstanding Jan- uary 1, 1887.
Recapitulation of bonds outstanding January 1, 1887.
290
HISTORY OF CLEVELAND.
Comparison of city debt of all kinds January 1, 1886, and January 1, 1887.
Principal and interest of bonds maturing in each month of 1887.
A comparative showing of items included for sixteen years-1871 to 1886, inclusive.
Amounts levied in the tax of 1886 upon sewer districts.
Lists of assessments prepared by the City Auditor's department and levied in the tax of 1886.
Results in 1886.
There were issued from the department during the past. year, 1886, 6,531 warrants on the treasury for the pay- ment, in the aggregate, of $3,178,771.98 .* The computa- tions and adjustments in the department of special assess- ments require a large outlay of expert labor.
The accounts in the City Treasurer's department are of the simplest character and are embraced under about two hundred headings. The receipt and disbursement of the funds constitute the principal labor of the department; the aggregate cash receipts for the year 1886 were $4,- 548,657.12, as follows: Municipal funds, $2,971,496.36, School funds, $1,178,821.62; Water-Works, $362,420.36 ; Public Library $35,918.78.
The total cash disbursements were $3,909,161.16, as follows : For municipal purposes, $2,954,841.03; for School purposes, $628,882.79; for Water-Works purposes, $302,178.05; for Public Library purposes, $23,259.29.
No city in the country has a better credit in financial cir-
* This is exclusive of the amount paid on the regular pay rolls, which. are made up by the several departments.
291
HISTORY OF CLEVELAND.
cles than Cleveland; in none have municipal affairs been administered with greater fidelity on the part of its ser- vants, and, while there are unquestionably many abuses, it. will be found that they are inherent in the system of gov- ernment prescribed by the organic law of the State, which admits of legislative tinkering with the minutest detail, and that in the administration of affairs no advantage has been taken of the evils of the system. That these existing evils should be cured must become more apparent as the city increases in wealth and population; and with a speedy application of an adequate remedy, Cleveland will continue to maintain its present high standing in the financial world.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.