FINANCES. North Carolina had no debt until the advent of the epoch of railroad building. In 1S48-5S several issues of bonds were autherized in aid of railroad, plank road, and canal com panies, and as security the State received stock in these companies. At the beginning of the Civil War the debt. of the State amounted to $18,167,000. The financial troubles of the wag greatly aggravated this condition, but the enor mous loans for war purposes were repudiated by order of President Johnson in 1865. Great in jury to the finances of North Carolina was clone during the five years of the 'carpetbag' rdgime that followed. Large issues of bonds for pur poses of railroad construction followed one an other in rapid succession. The Constitution of 1SOS forbids the issue of any bonds unless a special tax for payment of interest be levied. Hut this did not stop the growth of the debt, for in the following two years more than $16,000,000 of the 'special tax bonds' were issued. Another cause for issuing bonds was the refunding of old obligations and their unpaid coupons. Alto gether. in 1865-70. $24,375,800 of were is sued, and the total debt exceeded $42.000,000. As against this the State held $22,000,000 of railroad stocks, out of which only $3,000,000 paid dividend. The rest were worthless, as the money obtained from sale of the State bonds was squan dered. The burden of the interest on those bonds
lay very heavily upon the State, and there was constant defaulting.
This condition of affairs caused great popular dissatisfaction and a tendency toward repudia tion. Payment of interest on the 'special tax' loans was stopped in 1870, the special tax laws were. repealed. and all the efforts of the bond holders to enforce payment through courts re mained futile. in 1879 a compromise was reached with regard to the rest of the State debt. Under this compromise the old bonds were re funded at the rate of 15 per cent. to 40 per cent., according to issues. The conversion pro ceeded from 1880 to 1900, and the debt remained almost the same. The compromise has im proved the finances considerably. The budget of the State is small, but instead of the large deficits there is a small surplus. On November 30, 1902, the State debt was $6,527,770. The total receipts for the year were $1,924,134; ex penditures, $1.866,640; the balance in the treas ury, $111,280. The main sources of income are a. general property tax (about 40 per eent.). North Carolina Railroad dividends (10 per cent.), railroad and corporation taxes. earnings of the State prison, etc. Of the disbursements almost $300,000 a year goes for payment of in terest.