il The Portland Oregonian analyzes the Grange Bill^ HORSE “ WILL OREGON INVITE REPUDIATION? “ It would be difficult to exa g g era te the m enace to O regon s prosperity and gen eral w elfare that resides in the proposed constitutional am endm ent for people's w ater and pow er utility districts.* It is the one measure on the ballot fo r the N ovem ber election that leaves the gate wide open. It would provide entry for every hare-brained schem e that might be d e vised in the field o f w ater and pow er d e velopm ent. A ll that would be required would be prom oters sufficiently plausible and en ergetic to ‘sell* their schem es. ‘ “ The greatest evil in this pending amendment — and there are many— lies in the fact that it wipes out all limitations on taxation and the sale of obligations. The state has built up a structure for taxation that is carefully guarded to protect against extravagance which might lead to finan cial disaster. The constitution places a 6 per cent limitation on the state. The extent to which cities may create indebtedness is definitely fixed. There are hard and fast limitations on the taxing and debt-incurring powers of school districts, ports, irrigation and drainage districts— on every unit within the state that has such authority. “ But, he re co m e s a m ea su re that ignores all precautions and bluntly au thorizes the districts to be created under it, am ong other things: *To levy taxes upon the taxable prop erty o f such districts. *To issue, sell and assume evidences o f indebtedness.* “ Neither the 6 per cent limitation nor any other restriction would apply to these districts because they would be set up on the authority of the constitution, and the legislature, in passing an enabling act, could not provide conditions that would narrow the powers granted in the amend ment. That is the strongly prevailing legal opin ion. Attorneys for the proponents have been unable to show restrictions in other parts of the constitution that would be applicable. If the amendment is approved the lid is off. SENSE SERIES NO. 9 “ Parts of any one district do not need to be contiguous— they do not need to he in the same county; they can be as far apart as the slate boundaries permit; they can include one or more cities, or they can be exclusive o f cities. “ It is an open invitation for g erry mandering, and it would be seized upon by professional prom oters who would hope to profit through unsound d evelop m ent schem es and the sale o f securities. “ The a“g orient has been advanced that the people o f the districts would be able to protect themselves by settin** their own limitations on financing and investment. But would they do so? It has not been the experience elsewhere that they would. Irrigation districts now are up to the neck in trouble because the guess was wrong on the burdens that they could carry. The state, which guaranteed the interest for five years, under a provision that it is now proposed to revoke, is out more than $4.000,000 on that experiment, much, perhaps all, o f which will never be returned but must be passed on to the general taxpayers. If the property owners o f these sprawling, disconnected and overlapping districts could be depended upon to protect themselves, why has it been thought necessary to place taxation limitations on every other tax- levying agency? “ This step would court disaster and repudiation. It com es at a time when there is hysteria on the su bject o f p ow er developm ent, inspired fo r political pur poses. Those who think m ore clearly, y et believe in public ownership o f utilities, are against this visionary and loosely drawn am endm ent. “ But the time is ripe for schemers to rush these districts, if they are created, into difficulties from which they could never extricate themselves and wnich would injure, if it did not undermine, the credit of Oregon and o f its subdivisions. “ It was unrestrained enthusiasm for develop ment and overconfidence in ability to pay that first brought repudiation into our financial vocab ulary. That was a great many years ago, in the early days of the republic, but the experience has its lesson for us in this year 1930. The country was rich in resources, but their development was retarded by lack o f transportation. Then came a tidal wave of sentiment for the laying o f rail roads and the digging o f canals, the building o f Reprinted verbatim from the editorial page of The Oregonian, issue of September 26, 1930. Pacific Northwest Public Service Co. "Pepco” highways and other public works, for all of which public credit was staked, with no thought o f a day of settlement. Says a writer in reference to that era: ‘Private ambition and public spirit were skillfully played upon to induce voters to ratify with eagerness what doubtless seemed to many a public duty as well as a private gain.’ “ But there was a day o f reckoning and it ranks among the major catastrophies in the history o f the nation. Between 1830 and 1842, in this orgy o f public expenditure, the debt o f the states in creased from $13,000,000 to $213,000.000, and suddenly they found that they could not pay. State after state was unable to meet its obli gations. Pennsylvania, Maryland. Mississippi, Michigan, Florida, Indiana and Illinois were on the verge o f bankruptcy. All o f them suspended payment o f interest. All o f them were put to dire extremes to weather the storm and three, Mis- sissipni. Michigan and Florida, repudiated cap ital debt. The heavy indebtedness o f many south ern states hung over until after the civil war. More repudiation follow ed and in 1880 those southern states which h?.d refused to pay were joined by a northern state, Minnesota, which settled its railroad bonds at 50 cents on the dollar. “ Nor has repudiation been confined to the early era o f construction nor to the states. Numer ous cities, towns and counties defaulted on their obligations follow ing the panic o f 1873 and the courts o f the land were clogged with resulting litigation. “ The effect o f repudiation then, and always, has been to impair or ruin credit, to stifle growth and progress. “ The lesson o f these experiences and the in creased wealth o f the country have confined repudiation to isola ted cases in later years. ‘Another and perhaps more efficient safeguard against its recurrence,’ says a historian, ‘is to be found in the innumerable restrictions against the debt-making power o f the states which have found their way into recent state constitutions.’ “ The lesson is plain, y e t here in our own state it is proposed to ignore it by departing in our constitution from this established policy. Surely the voters of O regon will have more regard than that for their future w elfare and the good name and financial standing o f their s ta te ”