The Bismarck tribune., 1924-11-29
FINANCING OF
STATES MILL
BIG PROBLEM
Legislature Probably To BE
Faced With Necessity of
Authorizing Credits
LAW HAM STRINGS 1T
Lack of Capital Stock for the
Institution Makes Finan.
cling Difficult

Methods of financing the contin.
ued operations Of the North Dakota
state mill and elevator at Grand
Forks begins to loom up as one Of
the major questions which may come
before the state legislature, when it
convenes on January l. Some action
by the Legislature is believed to be
impe rative.
The present method of financing
the mill and elevator is regarded as
clumsy, and the difficulties which
have been encountered in its finan-
cling and are faced in continued fl
nancing of the enterprise, go back ia
an amendment to the state consti-
tuition. Under the method of es.
tablishing the state industries, bonds
cannot be issued except on mort
cages on actual property. The state
must acquire the property before il
can issue the bonds and get the
money needed for financing the in.
sttutiOns.
Article 81 Of the state consti-
tuition provides:
"The state may issue or guar
antee the payment of bonds,
provided that all bonds in excess
of two million dollars shall be-
secured by first mortgages upon
real estate in amounts not to eX-
ceed one-half its value; or upon
real and personal property of
state-owned enterprises or in
dustries, in amounts not exceed
ing its value, and provided fur
ther, that the state shall not
issue Or guarantee bonds upon
the property of state-owned
utilities, enterprises or indus
tries in excess of ten million
dollars"
In financing state enterprises, two
million dollars Of capital stock Of
the Bank Of North Dakota was au.
!; thorized, without the bonds being
secured by property. A three mil.
lion dollar bond issue was authorized
to build the state mill and elevator
at Grand Forks, and the property
given as security against the debt
When it came to financing the
state mill and elevator, it was found
that no capital stock was provided
1t was necessary to start the mill
with no capital to run it. The Bank
cf Mouth noU ofo
transfer, or unsecured loan, until
the last legislature met and author
lied the issuance Of milling bonds
which would be secured by grain
other inventory, bills Of lading,
cash, etc. 1t was necessary to buy
the grain before the bonds could be
issued. One million dollars Of bonds
have been issued as milling bonds.
Had the mill made a profit by this
time, financing would be simple
since it would have needed capital.
However, since the mill has incurred
large deficit, the problem becomes
more. difficult. The mill has pledg.
ed all Of its property under mort
gage, and if it desires to borrow
$50O,O00 with which to purchase
grain it must borrow the money
without giving security. The money
had been borrowed from the Bank
of North Dakota. There are some
officials who believe that the Bank,
which has tax money which often is
withdrawn at the time when the mill
needs most money, cannot be de-
pended on to finance the mill as long
as it continues to lose.
The legislature, it is certain, will
be called upon to consider the ques-
tion Of whether or not it will author
ize issuance Of any more milling
bonds, since the $2,000,0O0 author
lied in 1923 would, in view Of past
experience, be exhausted before the
next legislature meets. 1t is not
improbable that the legislature may
also be faced with the question of
levying an annual tax designed to
raise $1,000,OO0 or $2,000,000 to be
given to the mill management as
capital stock, to help it in its oper-
ations.