Historical Albion Michigan
By Frank Passic

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Any photos not otherwise credited are from the personal collection of Frank Passic, Albion Historian.

ALBION SCHOOL REFUNDING BONDS ISSUED DURING THE GREAT DEPRESSION

Morning Star, April 10, 2016, pg. 26

During the Great Depression of the 1930s, the Albion Public Schools (APS) was in dire straits. The Albion State Bank had closed at the end of 1931, and school money deposited in the bank was "frozen" except for incremental payments made over a period of a dozen years. In addition, the closure of the Commercial & Savings Bank by state and Federal officials in early 1933 meant a freeze on APS money deposited in that bank until the bankís reorganization. Property tax revenues were down, which caused less money to come into the school coffers.

Back then there were no grants to bail out operating debt, unlike the $3 million plus grant which would wipe out Albionís present 2016 indebtedness should the annexation vote pass on May 3. You were expected to pay back every penny in those days. There was no money to pay the teachersí salaries in those financially troubled times. The school board minutes of September 21, 1933 stated, "Be it and it is hereby resolved that the Albion Public Schools make application to the Department of Public Instruction in Lansing, for the sum of $20,355.75, said funds being impounded in the Commercial & Savings Bank and the Albion State Bank, and are needed to pay teachersí salaries." The petition was granted and Albion did get a loan against the impounded funds in the banks.

The dire economic conditions were the subject of numerous meetings, and school officials were pressed to pay bills, salaries, and other expenditures. The extent of the financial crisis is perhaps characterized by the board minutes beginning in June, 1933, when the ledger sheets containing the board minutes consisted of the back side of unused and outdated assessorís financial statements. An entry by the secretary stated: "Because of the failure of banks, delinquent tax payments, and lowering of receipts from all sources, we were obliged to conserve every cent. These pages were used as an economy measure. Lucile Moore, Secretary to the Superintendent."

During the 1920s there were three bond issues passed by voters to finance the building of what was to become Washington Gardner High School, completed in 1928. The school of course had to pay back the bonds to the purchasers with interest, over the designated time period of the bonds. The interest rates on those bonds were 4 Ĺ and 5%.

With a lack of available funds in 1934 in order to make the payments, the Albion Public Schools decided to issue refunding bonds. Refunding bonds are an accepted practice to restructure debt payments in order to avoid a default, such as in extreme circumstances. In other words, they decided to borrow money to make the payments on their earlier bonded debts.

On January 15, 1934, the Albion school board issued 16 bonds in $500 denominations totaling $8,000, with final payment due January 15, 1939. They were signed by school board president Alvin Dice (1878-1962), production manager at the Albion Malleable Iron Company, and board secretary Carl M. Creager (1885-1942) former cashier of the Albion State Bank. The bonds measured 8 Ĺ x 14" and were printed on green Hammermill Security Paper with the serial numbers handwritten in. To each bond was attached a series of $25 dated repayment coupons, again hand signed by the board president and secretary.

From our Historical notebook this week we present one of those bonds, an historic reminder of financial problems in the Albion Public Schools.


School Refunding Bond, 1934


Bond Coupon


Bond Cover

Next: FRONTIER DAYS JAIL


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All text copyright, 2016 © all rights reserved Frank Passic

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