should appoint from the uniformed force a chief having control throughout the boroughs of Manhattan, Bronx and Richmond, and another having control throughout the boroughs of Brooklyn and Queens, the efficiency of the entire force would be greatly increased, the existing discontent in the boroughs would be largely eliminated, and probably the commissioner would need but a single deputy in addition to the trial deputy.

3. Inferior local courts.-The appointment of city magistrates and justices of the Court of Special Sessions constitutes a notable exception to the principle of an elective judiciary which runs through the entire system of government in the state of New York. Experience seems not to have justified the retention of this exception. Any tendency to give to that important bench a political complexion would be greatly modified by adhering to the elective system.

ALMET REED LATSON.

TO THE GOVErnor,

SIR:

NEW YORK, N. Y., December 12, 1908.

In compliance with your request, we now have the honor to make the following report with regard to the constitutional borrowing capacity of The City of New York as of the 1st of November, 1908.

At the request of the special committee of the Senate and Assembly now investigating the finanacial affairs of The City of New York, and also at the request of the Charter Commission, the Comptroller has prepared a statement upon the basis of calculation adopted for the Finance Department of the City, showing the margin of borrowing capacity, within the constitutional limitation, as of November 1st, to be $37,931,640. Ten per cent. assessed valuation of taxable

Remaining out November 1, 1908, of the proceeds of sale of bonds, the following amount which has not been apportioned and transferred to the credit of the various accounts on account of which said bonds were authorized to be sold . .

Estimated margin out November 1, 1908....

$2,348,935 83

$37,931,640 58

Before discussing this statement in detail it is proper to say that early in May of the present year a special committee of the Charter Commission undertook an investigation of the City's borrowing capacity, which will be spoken of generally hereafter as the Debt Limit. For the purpose of ascertaining the City's contract indebtedness, certified as well as uncertified, on the books of the Comptroller, specific questions were addressed to each of the City departments, accompanied by uniform blank schedules. In reply to the Committee's communications it received from each of the City departments satisfactory replies, returning the schedules showing in detail as of the 1st of July the precise contract debt of the City payable out of the proceeds of corporate stock; that is to say, all contract indebtedness except that payable from appropriations for departmental purposes. The Committee then undertook an examination of all questions of law involved in the method of calculating the City's indebtedness for the purpose of determining whether the same was within the constitutional limitation, examining all of the opinions of the several Counsel to the Corporation in respect to these matters and thoroughly investigating the practices of the Finance Department in the inclusion or exclusion of one or another item in or from its calculations.

Having said this much by way of foreword, permit us now to recast the Comptroller's statement of November 1st, so as to show the elements of his calculation, which it will be noted at the outset does not even contain a statement of the gross bonded debt of the City, and which as prepared does not admit of any check or counter-calculation, except as the result of expert knowledge or access to the City's books, and therefore, although arriving at a result which may or may not be correct, is nevertheless quite blind to interested taxpayers or the holders of the City's securities. We prefer, therefore, to recast the form of statement summarily, for the time being adhering to the Comptroller's basis of calcula

tion.

The result is as follows, the figures differing from the Comptroller's only because of our failure to include the cents:

Gross bonded indebtedness, Nov. 1, 1908...

$933,121,157

$634,309,939

Ten per cent. of assessed valuation of taxable real estate, 1908

672,241,578

$37,931,639

Margin of borrowing capacity of the City upon the basis of the above calculation...

We may now consider the propriety and adequacy of the method of calculation.

1. It will be observed in the first instance that the Comptroller estimates land liabilities at $18,935,961. Our investigation has

disclosed the fact that this estimate of liability covers only that land where title has actually passed to the City, and that so far as practicable the estimate is made upon the following basis:

a. Awards actually made, but not yet paid.

b. Estimated awards about to be made, where the basis of the award has been determined by the commissioners.

c. Where no basis of award has yet been arrived at, upon the value of the property as assessed for purposes of taxation.

d. That nothing is included in the estimate for interest and for costs of acquisition, meaning thereby commissioners' fees, disbursements and legal costs.

2. The most careful examination leads us to the belief that in respect of the lands already acquired by the City, this estimate is inadequate. As will be observed, it is determined more or less arbitrarily by the Comptroller, can be increased or decreased at his pleasure, is certainly inadequate so far as concerns so much of the estimate as is based upon values as assessed for purposes of taxation, and is wholly erroneous to the extent to which it fails to include interest and the costs of acquisition. It is our belief that this estimate should be increased by not less than 50 per cent.; that is to say, that there should be added thereto as a minimum, $9,500,000.

2a. A very grave question is raised as to whether the City should not also, as a matter of business conservatism and in due respect for the spirit of the Constitution, estimate and deduct its contingent liability for real estate in course of condemnation, where the City has not yet actually acquired title. This is a question of law, however, which can only be determined by the courts or by an act of the Legislature. Until so determined, and notwithstanding the contention that the City has the right to discontinue, which we have maturely considered, it is our belief that the Constitution should have the benefit of the doubt. Our inquiries indicate that the lands in course of condemnation where title has not yet passed to the City are at least 333 per cent. of all real estate now being condemned. If the ultimate cost of such land. be calculated upon the same basis as that suggested by us for the determination of the ultimate cost to the City of lands to which title has passed, it would be necessary to add a further $14,000,000 to the item of land liability, thus making a total increase in the item of land liability of $23,500,000.