Thursday, June " 9, 1969

N.C. Tax Increase Is A Necessity

NOW WELL FIND OUT\ \

Notwithstanding assertions by some partisan politicians, there is little room for aryinng that North Carolina does not face the necessity of increasing taxes. This fact is self-evident to almost everyone who has given attention to the needs of this state and to the appropriations that have been approved by the legislature.

Surprisingly, there has been little controversy in this legislative session over whether or not taxes should be increased. There has been almost universal agreement that taxes had to be imyeased in order for the state to have revenue to

Key Decision In N. C. Bankina

By BTLUAM A. SHIHES Beflector Raleigh Bureau RALEIGH What many consider to be another landmark decision for the future of banking in North Carolina is expected to be forthcoming next month.

The case arises from the

elty of Hickory and the fast-growing Catawba County area. It concerns the continuing is-iue of local banks versus big, multi-branch banks in areas such as Hickory and Catawba County. The decision will be made by the Slate Banking Commission at a meeting scheduled for July 16.

It involves an application by a local bank, the Bank of Granite, headquarter in Granite Falls, to open a branch in Hickory.

The appliration has Iktii opposed by some of the large, branch banks already established in Hickory, as the Bank of Granite opposed the application of the large branch banks to open branches in Hickory several years ago Tlie earlier case, focussed a spotlight on the brandling controversy among banking interests.

Fastest Growing Town Recent data indicates that Hickory is perhaps the fastest growing city in North Carolina. A study shows it bas increased efiective buying income per household faster than such cities as High Point and Charlotte, Raleigh and Fayetteville.

The county in which the city of Hickory is located Cataw'ba, ranks sixth in the state in terms of numbers of people employed. Mecklenburg, Guilford, Forsyth, Wake and Gaston exceed Catawba. Cataw'ba exceeds some much more populous counties such as Durham, Buncombe, Cumberland, and Alamance.

Banking Controversy It appears that a hard decision on the issue of branching by banking institution has centered on Catawba County. The Bank of Granite contends that it is constantly threatened in its own com

munity by the big five banks which, it says, control eighty per cent of tlie total deposits in North Carolina.

The small bank in this case presented a statement by its president, John A. Forlines, saying that it has no ambition to be big for the sake of being big and also we do not believe in excessive branching. Only twice in the past 15 years has this bank sought permission to open branch offices, no more than 10 miles away from its main offices. But already, Forlines said, we are inte-gal part of the Hickory community.' The proposed branch office is only six miles from the headquarters in Granite Falls.

Granite Falls and Hickory are definitely one and the same community. Forlines said and he pointed out the bank already has both deposit and loan accounts m the greater Hickory area.

In reality. he said, we are a part of Hickory.

We need a more convenient office in order to better serve the present customers . . (in Hickory 1, Forlines said, Wc also feel that Hickory's thriving economy will ea^^ily support the addition of tlii.s branch. The Banking Commission deferred making a deci.sion of the application.

Scott and Jenkins

At Fhtt-Grecnville Airport last Saturday, Gov. Bob Scott, in the last of his jet - stops across the state to drum up support for his pending t a x package, had high praise for the efforts of Fast Carolina University President Leo W. Jenkins established at E C U a pioneer medical ducatPn program.

The Governor noted again the critical need of more doctors and other health profes-fessionals to improve the quality of health care for North Carolinians, and particularly in rural areas.

Then he said, There is no one in North Carolina who has done more for the health of rural people than Dr. Jenkins He has traveled back and forth throughout the state and to the legislature in his struggle to make a significant start in attackuig this

ritical problem of inadequate health care for our people. The program he is fighting for is a part of the program we can finance if the legislature is willing to take a forward step, enact our tax bill and enable all North Carolinians to have a better life.

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meet its needs in the next two years.

The controversy has been and still is over the^que.rtion of what new taxes wdll be levied to raise the needed revenue.

It is not likely that the legislature could make any significant reduction in its tentative appropriations even if it carefiHly reviewed each item in the budget. After all, tfie Appropriations Committee and its various subcommittees have been in the process of doing this since the legislature convened. Their report is the result of months of steady and diligent work. It is true that the state may, at the end of this biennium, have a surplus of funds. But it is also true that part of the funds which will go for balancing the budget the 1969 General Assembly finally adopts, will be surplus accumulated during the past rtvo years.

North Carolina, under its laws, must operate on balanced budpt. The legislature must make provision for sufficient revenues to offset the appropriations it makes. In spite of the fact that the budi-get for the coming biennium is much larger than the one adopted two years ago, it is by no means a lavish budget for state operations. It still leaves unmet many of the states needs.

It is indicative of the awareness that Tar Heels have of their states needs that while there have been arguments over where the new tax levies would fall, there has been little argument with assertions that additional revenues are needed if the state is to meet its obligations in the next two years.

New Law Protects The Rights Of The Voter

i rena

One

..o

World?

By JOHN CUNIFF NEW YORK (AP) For the practical purpose of doing business, a growing list of corporations has decided that already this is one worldpolitics, color and customs notwithstanding. They could be right; they may be wrong.

As the trend continues to multinational or international or transnationalthe words have subtly different meaningsrestless grumblings are heard from some nations. Others, such as Peru, have acted directly and seized assets.

Nothing to date, however, is likely to stop the trend which, by general agreement, usually proffers economic benefits to the nations but which also tends to clash with its customs and feelings.

Americans generally are blamed or praised for spreading the concept, but every indus-

By JAMES KILPATRICK

South Carolinas Senator Thurmond had a tough time

North Carolinas new law requiring presidential electors to cast their ballots in the electorial college for the nominees of the party which selected then! is a sound law.

The measure protects the rights of the more than a million North Carolinans who go to the polls n the floor the other afterin presidential elections. It assures that an elector noon, trying to build his case will not act in bad faith as was the case last year for tre resignation of Justice with one of the states electors of the Republican William O. Douglas. It was party. not, to speak truth, the Sen-

Those voters who go to the polls and support ators most shining hour, the candidacy of a particular partys presidential though it might have come candidate have the right to know that the states better wi^out toe incM-electorial votes all of them will be voted for Senator

that candidate if he carries this state. It is unfortun- 1 Thurmond was

ate that a new law is necessary for North Carolinas oug re

voters to be assured of such matters, but in view of what happened last year the legislature has acted wisely in enacting the new elector law.

Douglas Should Resign

Sec. Of State In Secondary Role

sign.

It is not a matter of one thing, or two things, or three. The extra-curricular activities of this busy jurist are one fuzzy thing after another. Nothing patently illegal. Nothing covert or cr(x>ked. But Douglas flirts with impropriety with a brand of arrogance all his own. He does not exactly disgrace toe robe he wears; he merely leaves

it a little bit soiled.

There is, for example, the matter of Douglas, the freelance writer, contributor to Playboy magazine. The current (July) issue of Hugh Hefners effulgence, intended for sophomores of all ages, carries a length article by toe Justice, this one dealing with the dam-building sins of toe Corps of Engineers.

It is Douglass fourth contribution to Playboy in a span of eighteen months. His first

multinational company sets up

business within a country rather than exports to that country.

Within recent months Americans have received an Idea of the power of foreign-based international firms.

British Petroleum Corp., Ltd., reported rich oil findings on toe sented. If any other conser- North Slope of Alaska. This

vationist or libertarian had greatly enlarged its supply of

written them, <Mie might re- raw materials for conversion to mark only his astonishment retail products. But it needc^' that Playboy should have pub- retail outlets, lished toe pieces. And theres BP first acquired for $400 mil-the rub. Hefner didnt buy lion the marketing, refining and these essays for their con- pipeline facilities of toe former

tent; he bought them for their Sinclair Oil Corp., which meant byline. And thats what Doug- the end of that popular Ameri-las sold. can retail symbol of toe dino-

Now, Playboy isnt ob- saur.

scene. By definitions Douglas Not long nfterward, it agreed helped to write, it sails to to purchase 25 per cent of toe windward of toe law. TTie Standard Oil Co. (Ohio), a dar-

article, on invasions of pri- magazine is a lumpy concoc- ing m(we that shocked some oil

vacy, appeared in December of 1967. A second, on water pollution, appeared in June of 1968. A third, on civil liberties, ran in Playboy for January, 1969. Now this.

Viewed on their merits, toe articles are unexceptional. There is not an original idea in them, but they are well documented and strongly pre-

Advertlsln* rates and deadlines available upoe request .^ember Audit Bureuu of CirculaUon.

By ROWLAND EVANS and ROBERT NOVAK

WASHINGTON-A middle -level State Department officer, asked when Secretary of State William Rogers would see a confidential report he was drafting on Soutoe^et Asia, said he did not have the faint-lest idea.

Its not Rogers I'm wo-ricd a b 0 u t, he said, it's Henry Kissinger.

This otherwise small incident tells much about toe silent revolution now taking p'ace in the vastly important formulation and carrying out of foreign policy inside the Nixon administration.

The fact is that for the first time in at least 25 years, since the latter part of toe Roosevelt administration, the Secretary of State now takes a secondary role behind the President's National Security chief. Although intimates of both Sogers and Kissinger fall all over themselves to deny this, it nevertheless has been an obvious fact since Jan 20. it became even more so by Mr. Nixons choice of Kissinger fall all over themselves to deny this, it nevCtheless has been an obvious fact since Jan. 20. It became even more so by Mr. Nixons choice of Kissinger, not Rogers, to be at his side in his crucial summit chat with South Vietnamese President Nyen Van Thieu at Midway Island ten days ago.

One little-noticed jurisdictional change ordered by Pres

ident Nixon soon after he

took office tells much about Ji.

toe expansion of power with- f 'lOT itOrS

in Kissingers White House of- ^

fice. ^

Cutting through the turgid ^ _ O _ _ _ _

language of the bureaucracy, 1^0111111011 061136

this change in effect ordered

all action or policy proposals Street Journal)

developed within the State De- liberal Walter Heller, the

Say

tion of bare bosoms, first-rate executives. Under toe agree-writing, he-she jokes, and ment, the British ompany Professor Hefners portent- might eventually gain control of ous advice to the lovelorn. It the Ohio unit, makes millions. It attracts The United States, with letters and articles from Sen- Gross Nati(>nal Product of more ators, bishops, and assorted than $900 billicm a year, can ab-literati. (Next month: Frank sorb with relative calmness Church.) Mainly it attracts such foreign invasion. But for againg sportsmen, out to ogle smaller nations the experience toe centerfold bunny. can be traumatic.

The point is that Playboy It is entirely possible that simply is no place for an some of these smaller nations Associate Justice of toe Uni- might have total output of less ted Stetes Supreme Court to than toe foreign company they propound his views on pub- host. Creneral Motors, for exam-lic affairs. If such publica- pie, sold $22.7 billion of goods tion is not beneath Douglass last year, much more than toe dignity it is beneath the total output of Argentina or

partment to go to Kissingers office in toe White House with or without specific clearance by Rogers or Undersecretary Elliot Richardson. Previously, osly recommendations carrying the Secretary or Undersecretarys okay found their way to the White House. This di rective was part of Mr. Nixons move to rebuild the policy-making power of the National Security Council, in disuse the past eight years.

Likewise, Kissingers influence as a direct result of Mr. Nixons wishes and Kissingers own unique expertise in the mysterious ways of the bureaucracy, has also been extended over Secretary Mel-vin Lairds Defense Department. But h i s sway is far more apparent over States traditional role as maker of foreign policy than over toe Pentagons defense role.

The decline of toe State Department today results from more mundane causes than Presidential directives. Kissinger is one of this countrys few recognized experts in virtually every aspect of foreign policy, from toe significance of nuclear weapons to (Continued On Page 5)

former Presidential economic adviser, and conservative Gottfried Haberler, the Harvard professor, disagree on a number of things. Theyre in firm agreement, however, that tlie 4*4 percent ceiling on Federal bond interest makes no sense.

Together with 65 other leading academic economists. Professors Heller and Haberler signed a statement urging repeal of the limitation that has lingered since World War I. The restriction, after all, does not limit interest rate.r, it merely limits the types of securities the Treasury can sell.

In toe current market no one wants Federal bonds at 44 percent. Long-term bonds sold some years ago, before interest rates moved above toe ceiling, are now selling at prices that bring toe investor returns above 6 percent.

The result is that toe Treasury must rely on shorter-term notes and bills, to which no rate ceiling applies. Recent note issues have carried rates above 6 percent, and the latest Treasury bill offering went at

a record rate of almost percent. So the bond ceiling saves the Treasury no money at all.

Worse toan that, it forces the Treasury to enter the market more oRen than it otherwise would, complicating its housekeeping and interfering with toe Federal Reserve System's management of monetary policy. Moreover, the average maturity of toe debt is shrinking, making toe debt more nearly like money and more likely to spur inflation.

It's good to see Professors Heller and Haberlee agree on this question. It would be even better if the common sense consensus could be broadened to include Congress.

Quote

Sex education in the public schools is a failure according to two experts attending an Atlanta conference on toe subject Whatever happened to recess?Atlanta (Ga.) Journal.

Courts dignity. It is almost immaterial to inquire what Douglas was paid for the articles. (He wont say; I have asked.) What Hefner bought

Denmark or Austria.

The output of all U.S. production abroad, estimated to be as much as $130 billiixi a year, makes American enterprise for his money was some of abroadforeign operations only the respectability of the as powerful economically as highest court in the Ian d. Japan or Germany.

That isnt for sale. For this reason America is in

The Playboy pieces arent the forefront of controversy as Douglass only contributions nations argue the merits of multo belles letters. As Senator tinational corporations.

Paul Fannin of Arizona has The plus factors, so far as disclosed, he did a free-lance smaller nations are concerned, article on folk singing for the are toe jobs, wages and taxes March issue of Avant-Garde, created. The drawback essen-t h e latest enterprise of tially is the absence of control Ralph Ginzburg. Whatever over toe behemoth to which it is may be said of the Playboy host.

This is not an idle fear, for toe allegiance of some multinational firms can be sorely tested. American companies, for in-

contributions, this exercise for Avant-Garde was plainly an impropriety: Ginzburg is a notorious pornographer, de

nounced by five of Douglas's stances, are encouraged to re

mit to toe United States their foreign earnings. But toe nations in which the profits are made naturaly like to see them remain at home.

No easy solution to the con-scure. He resigned in April flicts is anticipated, especially from toe $12,000 job. It is a as nationalism seems to be legitimate inquiry to ask growing in many areas of the what he did to earn the mon- world. Seizure of assets always ey. Mr. Justice Douglas isnt is a threat, and lesser problems

colleagues as a panderer.

Much has been written about Justice Douglass part-time executive duties as president of toe Parvin Foundation, yet much remains ob-

saymg.

are almost constant.

Strength For I'oday

Private Home Buildina Braked.

Wait And See

What is the cause of present-day violence? The person wlio can answer that question is either unusually perceptive or so badly mistaken that he needs to consult a psychiatrist or remain silent and let others do the talking. But toat we are in an age of violence everyone admits, and toe phenomenon is manifesting itself throughout the world and in toe most diverse segment of population. Tlierc are slum riots and riots on college campuses. Many of toe rioters are people of mature years, while great multitudes are young people in their teens. They march, they carry banners, they shake their fists, they occupy college buildings, they force themselves into toe office of a college president and tell Him where to get off.

Are these young people

criminals? A few of them may be. Others are urged on by elements in toe population that want to see the present social order go down the drain. But after full credit (if we care to to call it so) is given to sinister forces in our population, toe fact remains that individuals, youthful and -mature, are stirred up in a fashion and to a degree unprecedented in recent generations.

Society is changing from agricultural to urban. The home is a different place from toe home people were accustomed to fifty years ago The automobile has played a major role in toe formation of a new society. There is a liberty in thought and oehavior today which would have caused our grandparents to drop over dead. But we have survived and will again.

By EARL L. DOUGLASS

By ELMER ROSESSNER

The rise in banks prime interest rate from 7V4 to 8^/2 per cent may bring private home building close to a halt. The prime rate is the charge for loans to prosperous corporations. The rates to individuals and lesser corporations is higher. Interest rates to an individual needing a home, or to a small company planning an apartment house, may be 10, 12, 15 per cent or even more.

The only construction to flourish will be subsidized by federal, state or local governments.

There are two other factors toat will impede private housing.

One is points. Today when a lender* grants a mor*agage, despite toe high rate of interest, he usually demands points, toat is, a percentage of the principal. If a mortgage is, say, for $20,000, the mort

gagee is likely to demand six or eight points, that is, 6 or 8 per cent of tlie total. Thus toe mortgagors will get only 94 or 92 per cent of the loan $18,800 or $18,400and still pay interest on $20,000.

A Piece Of the Action . . .

The second is a demand for a piece of the action.

I'his is imposed in financing apartments and commercial buildings witli increasing frequency today. It does not apply to private homes.

A survey by Advance Mortgage Corp. shows that participation loans are increasing. In these loans, lenders demand a share of the income a new building will generate.

J. Theodore Dailey, president, said: In many cases

bargaining is less over whether there shall be participation than over the form participation will take. This piece of toe action is on top of the high interest rates.

Participation loans are a major reason why apartment developers are getting a f a t share of the tight money supply while home builders are getting less.

More Getting Into* The Art

Now, Dailey said more than

fUlRK

ROESSNEIi

half of new high-rise apartments are being financed with participations and so are many many garden apartments. Pension funds, some commercial banks and some savings banks have joined the life companies as participation lenders.

Participation mortgages, particularly on large shopping centers, were rare until about two years ago. Then some liie insurance companies introduced them to finance the upsurge in apartment construction.

In another form of participation, the lender also beco.mei a part owner. This is equity participation. One form is the joint venture, where the lending institution and develo-pr become partners. Typically, in such deals, toe lender supplies toe money and the developer supplies toe land and know-how.

Another participation is toe sale-leaseback in which the lender buys toe project after completion, or sometimes merely the land under the project, and leases it back to the developer. This gives b i g lenders a chance to share in toe tax benefits of real estate ownership.