The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1932-10-11
WHY A MORATORIUM?
Bismarck, N. D.,
Oct. 10. 1892,

EQ1COT, lTlOuuc.
North Dakota voters must go slow
" and consider carefully the prob
able results before voting on any kind
of a moratorium.
A possible temporary relief against
obligations to be met will inevitably
result in inestimable damage to the
state and its citizens.
There is now considerable volume
of North Dakota state bonds owned
by banks within and without the
state of North Dakota, which are by
such banks deposited with the Unit
cd States as security for deposits In
such depository banks of postal saw
iDgs funds. These bonds are accept
able at par by the United States gov
crnment as security for public de-
posts, the same as bonds of other
states or of the United States arc &C
ceptable.
There are certain definite require
ments that render any state bonds
eligible for acceptance by the govern
ment as security for deposits-one Of
which is that the state issuing the
bonds is not in default nor has not
defaulted on its obligations, neither
principal nor interest, for period of
10 years last past.
Hence, should any situation arise
in North Dakota whereby the state
cannot meet its obligations when due,
either interest or maturing bonds, it
will not be sufficient to rescind the
moratorium ard start again. If a
state fails to pay its bond obligations
as they mature and to meet its in
terest obligations as they come due,
the disability will continue thereafter
for 10 years after the last default.
At the present time the state treas
urer is able to borrow from the Bank
of North Dakota to offset so much
Of deferred installments of farm loan
borrowers, or so much of deferred
payment Of taxes, as may be neces-
sary to meet the maturing bonds or
interest on bonds. If a moratorium
should extend to either class of such
payers, or to any considerable por-
ton of either class of such payers,
to-wit: to farm loan borrowers
through the Bank of North Dakota
or to taxpayers, whereby such pay
ers shall have their times of payment
extended through moratorium, it
will, without doubt. be impossible for
the Bank of North Dakota to con-
tinue to relieve the necessities Of the
state treasurer. There is no other
place the state treasurer can turn to
borrow money. Hence default must
inevitably ensue.
There are many persons in these
times of stress, and even in the best
OF times there are some people who
are unable through some cause O,
other to meet their obligations as te
interest or taxes, but the law is broae
enough to cover these delinuuencie.
and the state can continue to func.
, ton.
A different situation will arise II
through a moratorium, these payer
or other payers who can pay are in
vited to postpone payment of thei
valid obligations to the state, an,
who as a result thereof will be en-
abled to pay other obligations, pos
slbly not SO pressing. but carrying
higher rate of interest.
AS soon as any default occurs O,
the part of the state, as it doubles
will occur il moratorium is ADOPT
ed, the United States government
will, in accordance with the polio
long pursued, Immediately order OF
all North Dakota state bonds where
ever now pledged as security for de
posts Of postal savings funds {
other public funds. as being made
quate security for public deposit
even though such bonds are now az
cepted as worth 100 cents on the do
lar.
Such North Dakota bonds 50 o,
dered out will, perforce, be immed
ately thrown on a depressed mark.
and will be sold for what they wi
bring at forced sale. The owne]
thereof will have to take their To-
and will have to Immediately inve
in bonds, probably at par or bette
ct states that have not defaulted an
that are acceptable under the la,
for substitution, or such owners WI
have to Immediately permit the will
drawal Of the public funds deposit.
The surrender of the public funt
deposit on account Of not ownir
and pledging state bonds eligible I,
security with the federal govcrnmel
means that such local banks are
that extent deprived Of ability to e,
tend accommodations locally.
| There are additional reasons VII