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Constitutional Provisions Governing State Borrowing

Published online by Cambridge University Press:  02 September 2013

B. U. Ratchford
B. U. Ratchford
Affiliation:
Duke University
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Extract

The power to incur public debts is one which may have a vital influence on all governmental services. Since borrowing is often the easy way out of a difficult financial situation, the state's credit must be jealously guarded against abuse by the unscrupulous, the inefficient, and the over-ambitious. As a result of their experiences during the nineteenth century, most of the states in this country placed constitutional restrictions upon the use of the state's credit. But despite limitations many states have contracted large debts during the past twenty years, and several of them have been embarrassed by debt problems.

Type
American Government and Politics
Information
American Political Science Review , Volume 32 , Issue 4 , August 1938 , pp. 694 - 707
Copyright
Copyright © American Political Science Association 1938

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References

1 Cf. 36 Statutes of S.C. 670; Briggs v. Greenville Co., 137 S.C., 288 (1926); State v. Moorer, 152 S.C. 455 (1929).

2 Cf. Pa. constitution, Art. 18; Armstrong v. King, 281 Pa. 207 (1924); and Taylor v. King, 284 Pa. 235 (1925). Before 1924, this provision was disregarded and amendments were approved every two or three years, i.e., in 1909, 1911, 1913, 1915, 1919, and 1923.

3 State v. Executive Council, 207 Iowa 923 (1929).

4 Mathews v. Turner, 212 Iowa 424 (1931).

5 Laws, 1922, Ch. 448.

6 Brawner v. Supervisor, 141 Md. 586 (1922).

7 Art. X, Sec. 4.

8 Cf., for instance, Public Acts of Michigan, 1917, Act No. 18, and Montana Laws, 1918, Ch. 21.

9 Commercial and Financial Chronicle, Vol. 138, p. 3131Google Scholar.

10 Kansas Laws, Sp. Sess. 1933, Ch. 98; State v. State Highway Commission, 138 Kan. 913 (1933).

11 In re Senate Resolution No. 2., 94 Col. 101 (1933).

12 Laws, 1933, Ch. 65.

13 State v. Martin, 173 Wash. 249 (1933).

14 Bush v. Martineau, 174 Ark. 214 (1927); Tapley v. Futrell, 187 Ark. 844 (1933); Amos v. Mathews, 99 Fla. 1 (1930); Carleton v. Mathews, 103 Fla. 301 (1931); Mitchell v. Lowden, 123 N.E. 566 (I11.); Baker v. Hickman Co., 164 Tenn. 294 (1932); Road District No. 4 v. Allred, 123 Tex. 77 (1934).

15 Cf. Crick v. Rash, 190 Ky. 820 (1921); Berry v. Fox, 112 W.Va. 513 (1932).

16 Ratchford, B. U., “High Correlation Between Index of State and Local Debts and Bond Defaults”, The Annalist, Nov. 22, 1935, pp. 717–718Google Scholar.

16 A study of state debts as of 1915, when they were only a small fraction of present-day figures, showed a substantially similar result. In that study, the states were placed in seven groups. While this classification differs from that given above, the groups were such that comparisons may be made with some degree of validity. Two groups, covering 24 states, were comparable to Group I above; these had per capita debts of $2.32 and $2.80. Two other groups included 15 states, and were comparable to Group II above; they had per capita debts of $2.94 and $3.83. Three other groups, comprising 9 states, were comparable to Group III above and had per capita debts of $4.65, $5.70 and $5.87. Commonwealth of Massachusetts, Bulletins for the Constitutional Convention, 1917–18, Bulletin No. 15 (Boston, 1918), p. 578–580Google Scholar.

18 Cf., for instance: In re Senate Resolution No. 2, 94 Col. 101 (1934); Johnson v. McDonald, 97 Col. 324 (1935); Stanley v. Townsend, 170 Ky. 833 (1916); State Budget Commission v. Lebus, 244 Ky. 700 (1932).

19 Kelly v. Earle, 320 Pa. 449 (1936); Legal Notes on Local Government, II (1937), 292–293Google Scholar.

20 New York Times, Mar. 28, 1937, sec. 2, p. 7Google Scholar.

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