Grand Forks herald., 1917-02-05
would then b elastic to the future
prosperity Of the state.

would then b elastic to the future
prosperity Of the state.
cannot but take exception to SEC
don 172 which places no limit ON the
amount OF bonds the state or any
political division thereof may Issue or
guarantee the payment Of in excess
bonds are secured by nrst mortgages
upon real estate. otc. According to
this section the mortgages may be
for the face or actual cash value of
tho security securing them or In ex-
cess thereof. From the information
that have do not know what 10 to
DO the debt limit OF tho political divis-
exceed ten per cent OF the assessed
valuation thereof. II there should be
no limit to the amount that could be
Issued or guaranteed of these bonds
(and here there can be much ground
for argument against such provision
~ ones collective rights are increased
at the expense Of ones Individual
rights) 1t docs seem to mo that In
= limit s a. to tho amount such o bonds d
should bear to the actual cash value
OF the security securing them and
this matter should not be left to the
legislature or anybody but the people
themselves. From the very nature
Of this section and it, purpose we
will be limited in tho group Of in
vestors who would seek such invest
ments. Our investors would DO such
persons who wish absolute safety Of
principal. permanency of investment,
and regularity In the payment Of divi-
dends. This brings us to the margin
of safety. In determining tho worth
Of an investment, the difference be-
tween the actual and permanent
values Of securities and the amounts
OF the corresponding Investments is
taken. this being termed the margin
gin will vary in direct ratio with
the rate of income. A United States
government bond. for instance, yields
less than two per cent to the investor
and tho margin Of safety 10 great, q
state bond may pay four per cent and
the margin Of safety is less. q western
farm mortgage may pay eight per
cent and the margin Of safety is cor
respondtngly still less. This compare
borne a good financial reputation.
Should such q state increase Its bond
issue so that IL would equal or exceed
the assessed valuation of the state, l
believe any thinking man will see
that the margin of safety becomes
less, that the rate the bonds will have
to bear will be increased correspond
ingly thereto In order to be sold. This
very thing would defeat the purpose
Of this section. namely, low rate of
interest. assume that II our state
contract a lawful obligation which it
is MORALLY bound to pay by an
exercise Of its taxing power II neces-
sary. that obligation 10 supported by
the taxing power within the meaning
Of this section. But by a decision of
the United States supreme court it is
be held legally bound to pay its obli-
cations by an exercise Of its taxing
power. consequently these bonds will
be mere promises to pay Of the state
and worth no more than their ratio
to their security. whatever that may
be. should the state fail to exercise
its moral obligation. As said in
Bank OF Washington Va. State Of Ar
kansas (2o How. $50. 632). chose
of a sovereign state are aware that
they must rely altogether on the sense
Of justice and good faith of the state"
am informed that the four mill
state tax levy is to remain. With an
assessed valuation of about $350,000,-
900 we have to raise nearly $3.S5O.00O
by tax levy to run our state govern
ment for the ensuing two years. This
exceeds the four mill tax levy per-
mittsd. What would we do if We had
$b0.000,00O or $100,000.000 of these
bonds to guarantee the payment of
should bad years come or other diff
culties which we could not foresee
with this four mill tax levy limit?
We would have the shame Of being
q bankrupt state. The tax levy would
have to be increased to eight or ten
~ In s1s
that we would be able to meet the in
terest when due. People are COM
planning that taxes are too high now.
What would they say then?
To permit ten per cent Of the voters
In majority of the counties to call
Q special election to recall an officer.
the same number to initiate or refer
legislation. and even to amend tine
constitution 10 very wrong. If you will
thereof you will sec that about two
per cent Of the voters could put US
to the expense Of a statewide cleo
ton. costing us perhaps over two
hundred thousand dollars to recall the
governor, for instance, who
costs us $1,000 a year. Would this
be wise economy? The recall, initfa-
tive and referendum sounds nice, but
are cumbersome and ineffective to
voked only in extreme cases. There
should be general demand for their
use and our basic law should be so
that a small minority could not put
us to such an expense. 1t does seem
to me that at least 25 per cent should
be required on all such petitions and
for amending the constitution great
er number should be required; at
least 40 per cent Of the voters Of the
state.
l certainly cannot understand why
the senate body is wanted in the new
constitution if there are to be no
holdover senators. It looks strange
to me.
I will now pass over minor details
and treat Of tho constitution as
whole. Written constitutions grow in
three ways: by usage, by judicial in
depreciation, and by formal amend
1t does seem that in our state this
year the constitution is to grow: by
revolution. I am we'll aware of the
prevailing opinion. repeatedly assert
ed in the bill of rights Of state con-
stitutions, that the people have an
inalienable right at all times to
amend their constitutions. and hence
no necessity might exist for limiting
their right by self-imposed restric-
tons. But the obvious advantage of
expressly pointing out in the constitu-
ton itself the mode Of procedure to
be observed in altering its provisions
has appealed very strongly to the
American people so that all the Amer