When a banker offers for sale a bond of any municipality, the "assessed valuation " is one of the important facts set forth. There is a general rule that the total debt of a municipality shall not be greater than a certain percentage of the "assessed valuation" after taking into consideration any sinking fund or debt for water works - which are supoosed to be self-sustaining. The " assessed valuation" is the value fixed upon the property of the municipality by authorized officials for the purpose of taxation, but the rules for fixing the assessment vary in the different States. In Massachusetts, for instance, it is customary to assess property somewhere near its marketable, or real, value, whereas, in many of the Western States the assessment is based upon about a third of the marketable value, or, even, in some cases, a lesser percentage; therefore, it is necessary to have some knowledge as to the percentage which the " assessed valuation " in a given State bears to the marketable value of the property in satisfying oneself as to whether or not the indebtedness of a municipality is excessive for the valuation given.
The "real valuation" is very frequently given in banker's circulars, offering municipal bonds, for the purpose of enabling an investor to reach the conclusion above mentioned. This "real valuation," however, is largely guess work, but long familiarity with such matters has enabled the bankers to approximate such figures with a reasonable degree of certainty.