The news in this'publi-
THE UNIVERSITY OF NORTH CAROLINA
cation is released for the
press on receipt.
NEWS LETTER
Published VVeekly by the
University of North Caro
lina for the Uhiversity Ex- '
tension Division.
SEPTEMBER 2, 1925
CHAPEL HILL, N C.
THE UNIVERSITY OF NORTH CAROLINA PRESS
VOL. XI, NO. 42
Editorial Boardt E. C. Branson. S. H- Hobbs, Jr.. L. R. Wilson, E. W. Knight. D. D. Carroll, J. B. Bullitt, H. W. Odum.
Entered as second-class matter November 14, 1914, at the Postoffice at Chapel Hill. N. C., under the act of August 24. 1912 •
X. FINANCIAL CONTROL
A. Outline
1. Revenug^
. Property and poll taxes per origi
nal abstract.
Taxes on unlisted taxables;
Public^service corporations.
Corporation excess.
Building and loan associations
and banks.
Subsequent charges and credits.
Receipts from tax sales and re
demptions.
Dog taxes. i ^
License and privilege taxes.
Fees.
Fine-s.
Miscellaneous receipts.
2. Accounting:
Books of original entry.
Cash book.
Ledger.
Control accounting.
Audit.
3, Disbursements:
Claim presented.
Examined by whom.
Passed by board.
Voucher drawn by whom.
Manner of payment.
Function of treasurer.
Record of Disbursements:
Voucher stubs.
Voucher record.
Cashed vouchers filed.
Classification of disbursements.
6. Control of expenditures;
Are commissioners guided by:
Budget?
Income?
Amount of indebtedness?
Bank balance?
6. Reporting:
.Daily or weekly balance sheet.
Published monthly reports.
.Annual exhibit:
Simple.
Comparative.
Grapllic.
Comprehensive.
Comparison with other counties.
State reports.
Publication of auditor’s com
ments. ^ \
B. Explanation
Without doubt the greatest defi
ciency in the operation of county gov
ernment is the clumsy and insufficient
bookkeeping so generally found. Most
county officials are honest, and they
set-out in all sincerity to keep a faith
ful record of business done, but usually
they have no knowledge of bookkeep
ing and are not equal to the task. They
attempt to get along with a cash book
^ and the same single-entry method by
which they have kept their personal
accounts. With the manifold funds,
accounts, and complicated transactions
of county business they soon get hope
lessly confused. Many honest men
have completed their terms with big
shortages which they cannot exp'iain,
while, on the other hand, a dishonest
official may be undetected for lack of
systematic bookkeeping.
A MinimuH) Resjuirement
North Carolina counties are spend
ing OB the average nearly $400,000 a
year, and it is an amazing thing that
the taxpayers will permit public funds
of that proportion to be spent without
any adequate accounting therefor. No
corporation doing a business of $100,000
a year would think of operaCing with
out ^ bookkeeper. Yet most counties
have been content to do so. A com
petent bookkeeper and a centralized
systeip of financial control is a mini
mum requirement in any well organized
government.
Keep Separate Accounts
A county derives its revenue from
many sources. Each ought to be kept
distinct and properly controlled. In a
certain county the auditor found the
tax list gave one total, the tax receipt
book another total, and the collections
plus insolvents still a third total. Why
the discrepancy?
Every receipt and every disburse
ment should be analyzed and recorded
in its proper account. A double-entry
system of bookkeeping requires a debit
entry for every credit entry. It thus
furnishes an analysis of every transac
tion, checks the mathematical accuracy
of the books, and sets forth at all
times the financial condition of each
•account and of the county as a whole.
Control accounts can be carried in the
ledger in place i>f detailed accounts
whenever the volume of transactions'
warrants it.
A big expense in most counties is
the annual, or periodic, audit by a pub
lic accountant. If the books are in
balance the audit can be completed in
few days and is comparatively inex
pensive. If the books are in a tangled
and unintelligible condition the audit
may require weeks and cost hundreds,
or even thousands, of dollars.
It is the duly of the county commis
sioners to pass upon all claims before
payment is made, but since the com
missioners meet only one day a month,
and then have numerous other matters
to claim their attention, it is easy to
see that the audit of claims must be
very hastily done. It amounts to no
more than a rapid review of expend!
tures for the past month.
Budget Plan Rare
Only a few counties operate under a
budget system. In moht counties the
commissioners try to maintain a fair
equilibrium between income and appro
priations, but not infrequently they
close the year with a deficit. It is
hardly correct to say '‘close the year”,
for more often the accrual system is in
use and as soon as taxes begin to come
in they are used to pay the previous
year's bills.
Last week something was said about
the value of an annual report to the
taxpayers. It is only necessary to re
peat l^ere that this report should be
comprehensive, yet simple. It may be
made more intelligible if shown graph
ically and in comparison with the re
port of the previous year, or with
reports of other counties.
Theoretically financial control in a
county rests with the commissioners,
but without a responsible agent to act
for them between meetings, without a
b'udget, and without a thorough and
comprehensive system of accounts and
records to guide them, there can be no
real control.
C. Questions
Does your county have an auditor?
Who keeps the books of-financial
record?
Is there a double-entry system of
bookkeeping in use?
Can the county officials give the
exact indebtednes.s of the county?
Is the sinking fund to retire bonded
debt faithfully provided for?
Is there a bond book?
Is there a classified record of dis
bursements?
Who actf^as treasurer or financial a-
gent? is he competent?
Are the treasurer’s books always in
balance?
Can the sheriff, or tax collector, give
you the amount of taxes collected and
outstanding?
Is there a full record kept of fees
collected?
Is there a full record kept of fines
collected? Do Justices of Peace make
regular reports?
Are vouchers drawn monthly, or at
any time? Who writes them? Who
signs them?
Does the county operate under a
budget system?
Does it live within its income? Does
it keep each year ’s taxes separate? ’
Is there an annual audit? How much
does it cost? Are the auditor’s com
ments ever published?
Can any citizen secure accurate in
formation relative to county finances
at any time?
Is there an annilal financial state
ment that is intelligible?
Is there any more, or any less, con
trol over the school fund and the high
way fund than over the general county
fund?
D. Sources of Information
The financial record of the cqtinty.
Interviews with the county ' officers.
Interview with a public accountant.
Examination of the books of a well-
governed city.—Paul W. Wager.
COUNTY GOVERNMENT
For several weeks the News Letter
has been running a series of outlines
for local tax study clubs. These out
KNOW NORTH CAROLINA
Second in The South
The library of the
North Carolina with
University of
137,982 bound
volumes was the second-largest col
lege library in the entire South in
1924 according to a recent report of
the federal Bureau of Education.
The University of Texas, with two
and one-half times as many students
is the only Southern college with a
larger library than ours. The library
of the University of Texas contained
266,011 bound volumes. In bound
volunaes pec student we rank ahead
of Texas.
Of the 106 state-supported col
leges and universities in the United
States,only fifteen have more bound
volumes in their libraries than the
University of North Caroli/fa has.
C..*rnell University ranks first with
710,676 volumes, followed by the Uni
versity of California with -635,000
vofumes.
lines have dealt largely with county
jgovernment. Below is a brief outline
of an address on Improved' County
Government delivered by Prof, E. C.
Branson before the State Association
of County Commissioners at Blowing
Rock, August the thirteenth. It is
probable that the address will be
pointed in full in pamphlet form at a
later date. Meanwhile the outline can
be used as a guide to students of local
government in North Carolina, and in
other states.
IX. STEAM AND INTERNAL COMBUSTION ENGINES COMPARED
In connection with the production of
power from fuel, it remains to com
pare steam engines with internal com
bustion engines. It has been pointed
J3ut that small internal combustion
engines working on the Otto cycle and
using-gasolin^ and high-grade kerosene
are suitable for small powers only.
They are therefore left out of this
comparison. For the generation of
electricity, engines capable of utilizing
efficiently the lowest-grade oils will be
considered .in comparison with steam
plants. Such engines are the Diesel
and semi Diesel engines.
Advantages of Each
Outline of Address
1. Fundamental importance, in the
State and the Nation, and the rising
tide of public concern.
2. Inherent weakness and common
cause of failure in County Government
everywhere: The lack of organic
unity under definite, responsible execu
tive headship],^ abundant county gov
ernment laws already on our statute
books but it is nobody’s business to see
that these laws are enforced, in con
sequence of which every county official
is a law unto himself. County Gov
ernment at present in almost every
State of the Union is headless, lawless,
inefficient and wasteful almost beyond
belief, with notable exceptions—some of
them in North Chroliha. Illustrations
and instances.
Remedial Suggestions
3. Remedy. It lies (1) in definite, ex
ecutive headship by whatever name
called, as county manager in Alamance
or auditor in Edgecombe, New Han
over, and another county or two—this
executive officer to be chosen by the
county commissioners; (2) in unity on
the basis of executive county budgets,
centralized fiscal control and simplified
uniform public accounting for and re
porting upon all public moneys handled,
as in Ohio, Indiana and a few other
states. Which essential reforms in
state finance are .all taking place in
Governor McLean’s administration.
The same reforms in public finance
must be set up in the handling of all
public moneys in the counties of the
state. Signs of organized graft are
very rare in North Carolina; they are
very common in the Middle^ West ac
cording to Herbert Quick. The trouble
in North Carolina does not lie in dks-
honesty but in unbusinesslikeness, un-
aupervised methods and almost inevi
table waste in county court house of
fices. Our*" main trouble lies in the
lack of authoritative supervision and
friendly direction. _
County Government Law
4. The chances are that we need a
General County Government Law pat
terned after our municipal government
law, based on a classification of coun
ties according to population and tax
able wealth; and a choice of cer
tain forms of government by the
counties in each class, all the forms
of government offered holding county
officials to strict business methods
of handling public moneys; a law
granting local autonomy in all minor
matters of legislation under general
State law, thus removing from the
Legislature the endless details of Pub
lic-Local laws in County Affairs.
Manuals of Instruction
5. Also we need Manuals of Instruc
tions for county officers and the annual
Steam is still the most familiar and
reliable source of power. From the
standpoint of operation, the steam
engine and turbine have the following
advantages over the internal com
bustion engine:
a. Smoother running because of the
absence of explosive forces.
b. .Greater certainty of adequate
lubrication.
c. Less subject to interruption of
service, because of greater simplicity
of mechanism, and because of (a) and
(b), with resultant longer life.
d. Greater overload capacity and,
therefore, smaller-size engines may be
installed.
Operating advantages for the in
ternal combustion engine are as fol
lows:
(a) Requires less attendance, due to
elimination of coal and ash handling
and other boiler-room labor.
(b) Freedom from troubles arising
in the boiler room.
Cost Items Compared
The items that enter into the total
cost of .^power may be compared as
follows:
auditing of county accounts by public
accountants representing the State, as
in South Carolina-competent public
accountants who examine county ac
counts as bank examiners examine the
business of the state banks, but with
even greater fidelity land competency,
not State spies but State officials of
fering direction, friendly counsel and
advice and wherever necessary com
plete audits of county accounts—a ser
vice paid for by the counties as our
banks pay for bank examinations; a
state-wide service centering in the of
fice of the State Auditor.
State Guidance
(a) The first cost of a steam power
plant using reciprocating engines is
greater than that of a semi-Diesel
engine plant and less than that of a
Diesel engine plant. With steam tur
bines the cost is less than that of either
Diesel type or engine.
(b) Depreciation, maintenance, and
repairs are higher for oil engines than
for steam engines or turbines.
(c; Labor costs are less with oil
engines than with steam engines or ^
turbines.
(d) While the oil engine plant is
more efficient in utilizing the heat ,
energy in fuel, the cost of oil com
pared with the cost of coal may be so
high that total fuel cost in the steam
plant may be less than in the oil
p'ant. Other factors to be considered
are that the supply of oil is not as
reliable as that of coal and that oil
prices are subject to greater fluctua
tion. ••)
Because of iheir lower first cost and
greater reliability, steam engines and
turbines have been found to be the
more suitable for the generation of
electricity, although internal com
bustion engines, particularly the Diesel
types, are receiving increasing atten
tion.
The variability of the economic
factors enumerated above shows that
the decision in any particular case de
pends upon weighing these factors as
they apply to that particular case. It
has previously been shown, for ex
ample, that saving in fuel cost does not
always mean saving in total cost. The
saving in fuel cost must more than off
set the fixed charges on the additional
capital invested, or the expenditure for
high efficiency equipment is not justi
fied This is likely to be the case ^
where fuel is cheap. —E.G. Hoefer.
6. State guidance, direction and
supervision in county matters directly
related to State authority; thus the
magistrates, constables - and sheriffs,
as law and order officers, county court
clerks, county recorder court officers
ought to be related directly to th^ At
torney-General of the State, whose of-
ifice ought to be expanded into a State
: Department of Justice functioned and
staffed for immensely greater uses to
North Carolina; State moneys locally
collected or disbursed locally by county
officers ought to be accounted for and
audited competently by the various de^
partments of the State in Raleigh.
State school moneys loaned or dis
pensed would thus naturally be under
the authority and auditing officers of
the State Superintendent of Public In
struction. ' Thus the county officers
handling confederate pension money
would be related to the State Audi
tor’s office in ways off supervision and
auditing.
7. Suggestions. A County Government
Commission appointed by the Governor,
as recommended by the State Asso-
ciation*of County Commissioners.
8. Research studies in County Govern
ment under the Institute for Jlesearch
at the Uhiversity of North Carolina;
the purposes and ends of such studies.
The three County Government Re
search Fellows now at work, the county
surveys already made and^ the program
of county studies during the next two
years.
DAIRY COWS BRING WEALTH
following clipping from an
The ^
article * recently published in the
Durham Heralij is worth reading care
fully. On the basis of dairy cows per
farm, North Carolina is at the bottom
among the states’of the Union. Dairy
cows bring diversity in agriculture and
prosperity to farmers. Milk, the most
valuable of all foods, is never tasted
on one hundred thousand farms in
North Carolina, tenant farms for the
most part.
An idea of what the dairy cow has
done for prosperity may be gained by
a few specific instances. Some genera
tions ago Denmark was poverty-
stricken. Her soils were depleted, her
people poor. Then came the dairy cow.
Today Denmark is the richest country
per capita in the world. The cow did it.
In our own country two generations
ago, Wisconsin was bankrupt. The
dairy cow waS brought to this state,
and today Wisconsin is the. most pros
perous commonwealth in the United
States, the greatest dairy state in the
Union, Her farms are*covered with fine
fields of alfalfa, corn, and clover. Silos,
beautiful homes, and well equipped
farms abound everywhere. Her farmers
are prosperous , and contented.
During the 1920 slump, Wisconsin sent
$50,000,000 to the Federal Loan Bank
of Chicago. In the last twenty years
Wisconsin has not had a bank failure
attributed to business causes.
T will give you another outstanding
example of the value of the dairy cow.
It is Steele county, Minnesota. Crops
had failed. The soil -was depleted.
Conditions grew worse until the bankers
had a better claim to the land than the
man who lived on it. One day a
farmer tried to borrow some money.
He wanted to buy dairy cows. The
banker demurred, but finally let the
farmer have the money. 'The cows
were purchased. The loan was soon
paid. The soil began to improve.
Then another farmer did the same
thing and still more farmers. Three
years ago I learned of the prosperity
that came to this the smallest county
in Minnesota, having an area of only
432 square miles and a population of
18,060. Their bank deposits were about
$400 per capita. They had 18,000 cows on
800 farms, or twenty-two cows for
each farm, one cow for each inhabitant,
and these cows produced 6,000,000
pounds of butter annually. This butter
brought into the county $2,600,000 or
an average of almost $140 for each
man, woman, and child. Their bank
deposits had reached $7,000,000 and
increased at the rate of more than a
quarter of a million dollars each year
for eight years.
The dairy cow always brings diversi
fication, and in this year' to which I
refer the production was 187,000
bushels of potatoes; 66,000 tons, of hay;
96,000 bushels of barley; 1,776,000
bushels of corn; 260,0)0 bushels
of spring wheat; 1,870 bushels of oats;
55,000 cows; 401,987 chickens; and
861,359 dozens of eggs. These are the
figures from the county that a few
years ago was financially bankrupt.
The dairy cow did it all.