The Republican. [volume] (Oakland, Md.) 1877-current, 1938-02-24
WARNS AGAINST BORROWING
FOR MARYLAND OPERATING COSTS
Governor Nice In Second of Personal Statements Problems
of State AbsOves Administration Sole Responsibility
For Such UnsOund Practice, Seen AS Financial Chaos

on problems Of the State government,
absolved his administration Saturday
from sole" responsibility for the "un-
sound practice" of borrowing money
to meet state operating expenses.
Warning that "such practice must
ultimately result in financial chaos"
the Governor asserted money Dor
rowed by the state can be used "legit-
imately'' only for investment, capital
improvements or requirements, the
usefulness of which outlive the period
Of Indebtedness"
He cited recent press criticism
which he said placed responsibility
for unsound borrowing on his admins
istration alone. These, he asserted,
have been grossly misleading"
81 wish to discuss this subject from
a factual basis in order that the peo-
pie X may have a clear idea of
the picture during the last five years"
he continued.
First: In 1888, the state borrowed
twelve million dollars to be spent for
unemployment relief in Baltimore
city. At that time, the city of Balti-
more had a bonded debt of one hun
bred sixty-nine million dollars. The
net city debt financed from property
taxes was so close to the credit danger
line that the state was forced to lend
its credit to aid in the solution of Bal
timore's unemployment problem X X
"The pay-as-you-go plan now in OPP
GRAFTON in Baltimore city is of course a
sound financial program as far as it
goes, but the people Of the state
should not be deceived into thinking
that its inauguration was the result
of wise management, because, as a
matter of fact, it was forced upon the
city by the above cited condition and
is the result Of compulsion.
Second: In 1888 also, 100000 of
state bonds were authorized for the
teachers retirement system Xxx.
"While tn appropriation of bonds
for this particular purpose has an ele-
ment of soundness and may be called
capital outlay, it was the first time
that this appropriation had not been
made entirely from money for what
previously had been considered an OPP
/ &c tot
"Third Toward the end of the cal
endar year 1884, just before my inau-
guration, it was revealed by the state
treasury officials that there was an
impending treasury deficit of $780,
900 and that necessary 81 500, 900 of
working capital had also disappeared,
making total of S3,8OO,OOO necessary
Immediately for general treasury pur-
poses. Also 100000 was needed to
prevent a deficit in the annuity bond
fund which supports the state debt
| Consequently, there was appropriated
by the General Assembly of 1885 from
an emergency bond issue of $8,500,000
the sum of S4,3O0,000 for the overrun
in the operating expenses of the state
government under the previous ad-
ministration, which bond issue of 49,,
100000 is not now and never will be
burden on real estate.
at is only necessary to add these
amounts together to show that the
! stupendous sum of $17,100,000 was
used for other than capital OUTLAWS by
or for the previous administration and
/ the states bonded indebtedness in
consequence was increased to that ex-
tent X.
Turning now to tn euse by the
state of borrowed money for operating
expenses during my administration
which the record shows has been done
to finance the state since October 1,
1885, the following comprise the total
of such appropriations for some Of
which | assume my share of response
bility:
"First, part of the states contrlbu-
ton for four years to the teachers re-
tirement system reserve has been by
bonds. This was following precedent
of the previous administration and is
in the opinion of many authorities
sound use of borrowed money. In order
to be consistent, however, we will con-
slider this as used for operating eX-
penses. The legislature arbitrarily
raised my recommendation for this
purpose by half million dollars, so
that the total oyer four years for this
Edgar, Clyde Folk, Dale Horchler
John Merrbach, Wanda Beachy, Mil
bred Frickey, Alice Horchler, Betty
Mckenzie, Junior Beachy, Thomas
Bender, Richard Broadwater, Darius
Dietle, Edward Hoke, Donald Kamp,
Edgar Mckenzie, David Patton, Oil
yer Pope, Richard Wright, Floyd