The daily times., 1921-10-11

have adopted in dealing with the
state. We limit the amount OF in
which they may create and
then pledge the entire taxing power
for the payment of the interest ana
principal when due when we are deal |
ing with towns, cities and counties. |
When we deal with the state, the lid |
is taken of as to the amount OF in
debtedness that may be created, but
we refuse to pledge our assets, the
taxing power, for the payment OF the
Indebtedness, or the interest there
on.
1.-The difference may be crudely and
bit inaccurately illustrated as fol-
lows:
Two different sets of men organ
ize two different corporations, each
with a capital stock, say, of million
dollars. One Incorporates in its char
ter that the bonded Indebtedness of
the corporation shall never exceed 25
per cent of it's assets, but that the en-
tire assets shall then be pledged for
the payment of the indebtedness.
1.-The other puts no limitation in it's
charter as to the amount of debts
which may be incurred, but puts or
attempts to put therein a Limitation
upon the power of the corporation to
pledge it's assets for the payment of
it's debts.
The one says We will not borrow
lover 25 per cent of our assets, but
when we have borrowed it, 100 per
lcent of our assets are pledged for it's
payment. The other says, we will
borrow all we can, but only Is per
lcent of our assets shall be liable for
!. the payment of our debts.
1.-The merest tyro in the business
poration described will be able to get
money at the lowest amount of inter-
est and from the most reasonable
lenders of money. The risk is small
and the security good
THE second corporation named if
it gets any money at all will not only
have to pay the current rate of in
terest, but in addition will have to
pay a rate which will compensate the
lender for the taking of the risk. In
the second case, careful business men
will not lend the money and this cor
poration will be compelled to go to
those who are willing to take risk
, and charge for it and will therefore
ha lod fn h;1b 70
. of interest, and borrow from the most
exacting of lenders.
1T is not to be wondered at that
g the state of North Carolina has diff
= fculty in borrowing money and in
borrowing it at good rate of inter.
q est. We have published to the world
that our assets are from two to three
= billions of dollars, but decline to
pledge them for any money that we
may borrow.
1T is a most anomalous situation
The General Assembly is composed OF
12O persons in the House and SO in
the Senate. These ITO persons may
authorize any town or city or county
in the state to issue bonds for as
large an amount as it is possible to
sell and pledge etheir full taxing pow.
Ter for the payment thereof. They
may bankrupt every town, city an6
county in the state, but when they
are dealing with the state affairs
they are not trusted, except that they
tmay authorize the sale of an unlimited
amount of state bonds, but canno,
4 pledge the resources of the state fol
the payment thereof.
The 100 counties in North Caroline
% can borrow more money, as separate
corporations, than the state, which
is the creator of them all, can Dor
% row. The cities and towns scattered
o throughout the state, under the ex
isting laws can go on the open mar
ket and borrow more money than the
state of North Carolina can borrow.
8 "It is usually the case that the ere.
lator is greater than the created, but
o under the taxing laws of North Car
d olina, the created are far greater thar
}. 1.-THE creator
81 "NO great necessity exists for any
y change in the fundamental law as to
y icounty taxation for road purposes
l. Ample power is given in the Consti.
e tuition to the General Assembly tc
e authorize every county to raise all
y funds that should be necessary fol
this purpose. The only change that
) might be suggested with any force is
n nature and thereby avoid the contin.
It ual necessity of special statutes