Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1918-11-04
SCOTS book, "Repudia-
don of State Debit Shows
Danger of Unlimited Bond
ing

Fargo, N. d, Nov. 3.-1n connection
with the constitutional amendments
to be voted on next Tuesday with ref
srence to unlimited bonding of the
state and guaranteeing of bonds facts
gathered from Professor SCOTS rep
Idation OF state Debts will be Of in
terest t the voters Of North Dakota.
Ten States Experimental.
Tie following ten states and also
the state Of Minnesota during the
period between 1912 and 1870 did the
very things that the proposed amend
ments want North Dakota to do. They
became liable upon bonds in aid of
Germs, Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama,
Mississippi, Louisiana, Arkansas and
These states were, in 1870, liable on
bonds in aid Of business enterprises
In the aggregate sum Of over $685.
000, 1000.
. Undertakings Failed.
Most of these undertakings failed,
or were partly or wholly unsuccessful.
The business in support Of which these
bonds were issued was represented by
r%ailroading. building of plank roads
with toll privileges, canal construction.
navigation companies. the state Of
in the the sun nnal Of $4,000, in aid i Of the
Crocodile Navigation company, etc.
AS a result of this experiment in
private business the state were bank
rupted. They could not meet the OBJ
legation of these bonds. The taxpay-
ers groaned under insufferable tax
burdens. The development of the
states was checked and retarded.
Their credit was ruined and their hon.
or compromised.
Investors Lost.
There were lost to small investors,
as we'll al large, millions of dollars in
vested in these bonds.
Note the effect on the credit Of the
state. The value of the securities of
the state Of Arkansas, during this
on the dollar. The average value of
its bonds and securities from 1872 to
1879 was 10 cents on the dollar! The
average value for North Carolina for
the same period was 25 cents on the
dollar. Imagine a bond of a state
for 500 selling at. only $25 or $19.
Yet, such is the result of unlimited
state bonding and guaranteeing of
bonds.
During this same period the bonds
of little Rhode Island sold on the
average Of $1.04 on the dollar. Why?
Because this state was on a sound,
financial basis and did not permit the
issuing of unlimited bonds, nor the
guaranteeing of bonds. For the same
period Connecticut was s1.O4: Massa-
chusetts was $1.03; New York, $1.10;
Maryland, $1.02, and so on for the
/ states that were on a sound basis.
Every state that experimental with
bonds for private business burned her
fingers and had the sad and shameful
experience above related. g
Voters of North Dakota should
learn from the experience of tother
states.
Minnesota's Experiment.
The proposed amendments remove
all debt limits. Thiss.is admitted by
Mr.. -Townley and the state administra-
ton. The purpose is to enable North
Dakota to go into any or all business
~ deep as spectators may wish.
Listen to the experience of Mime
sofa when the lid was removed from
the debt limit. The original constitu-
ton Of Minnesota had a debt limit of
$250,000. North Dakota, now has a
limit of 100000. On April Is, 1859
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