JOHNSON ANSWERS SCOTTS ACCUSATIONS
Quoted below is a verbatim text of Mr. Charles M. Johnson'*
reply to various attacks that have been made upon him:
\1Y FELLOW DEMOCRATS:
For the past several weeks I have tried diligently to inform the
people of North Carolina on my jKisition on the issues of this
campaign. I have charted a course for the future, based on sound
reason and judgment and in the light of prevailing economic and
national conditions. But 1 have tried just as diligently to stay
away from ill-advised or hollow promises or charges.
1 am still firmly convinced that the people of North Carolina
are first interested in selecting the man best qualified for Govornor
rather than in what the candidates think of each other.
These 1 consider to be issues of paramount interest tb our
people in this campaign. Here are some of the things to which I
am committed by platform declaration and by public utterances:
I am against increased taxes. 1 urge substantial salary increases
lor teachers and state employees, reduction of the teacher load,
state aid to the counties to provide proper school buildings. I ap
prove all of the medical care program, urge rural road improve
ment, greater aid for the State's dependent and aged citizens, I
favor greater home rule for our municipalities and counties, pro
pose increased services to farmers, and desire to see rural citizens
represented on more major boards and state commissions and
favor increased state contributions for library services.
During the course of the campaign I shall discuss additional
subjects.
1 have tried earnestly to conduct my campaign on a high plane.
Thus far I have discussed issues, not personalities, and have said
nothing that was in anywise critical of the capacities or characters
of my opponents.
Tonight it is tiecessary for me to do what I had hoped to avoid.
Speaking in Nashville on the night of April 10, Mr. Kerr Scott
made certain false accusations against my conduct of the office
of State Treasurer. By unavoidable implication the language he
then used, and has since repeated, reflects both upon my character
and motives.
I assumed that these charges were made in ignorance ratner
than in malice, and that once Mr. Scott was in possession of the
true facts he would realize the utter baselesssness of his Nashville
accusations and would refrain thenceforth from repeating them.
In a dignified and factual letter dated April 16 and addressed
to one of Mr. Scott's supporters, in response to an inquiry, I
presented the true facts.
1 misjudged Mr. Scott's desperation. He continues to reiterate
his Nashville accusations.
I am willing to pardon much to Mr. Scott in the way of indis- t
creet and even intemperate speech. I know from long observation
his genius for reckless utterance. I still recall his savage tattak on
the motives of those who led the fight for the state hospital and
medical care program, the merchants and civic clubs.
But there is a limit to what I am wiHkrif to overlook in Mr. Scott, and he
has exceeded that limit.
Never before has any opponent. Democrat or Republican, charg
ed me openly or even by insinuation with any personal, moral, or
official delinquency.
In his Nashville speech, Mr. Scott charged that State Treasurer
Charles M. Johnson ? and I quote from his press release: .
(Quote) "has been losing a million dollars a year to the taxpayers by neg
lecting to do what the legislature empowered him to do and in giving him
authority to act, commanded him to do. (End Quote)".
Speaking in Warrenton on April 26, Mr. Scott went even further
and declared that
'(Quote) "Johnson has had the power since 1943 to recommend to the Gov
ernor and the Council of State that surplus money be put out at interest, but
tie did not act until he (Scott) brought the matter to the attention of the pub
lic this month. (End Quote)".
Mr. Scott also said in his Warrenton speech that he had in
vested surplus agriculture funds. He had been commissioner since
1937, but had never invested any of this money until 1945. If I
were given to making false accusations, as he has done, I would
just make that statement and leave it there. But I know the rea
son and will tell you. He just simply had no authority prior to
1945, and if he had lost any money he would have been liable.
This is exactly the same thing that he now charges me with not
doing. i
Under the law, the Governor and State Treasurer, with the approval of the
Council of State, may Invest excess money In the General Fund In' federal or
state bonds or notes under certain conditions. Before they can recommend such
investments the Governor and State Treasurer must be satisfied and I quote
from the law? "There is cash in the General Fund of the State in excess of the
amount required to meet the current needs and demands on the said fund of
the State."
First, let me dispose once and for all of Mr. Scott's Warren
ton charge that the Governor and the State Treasurer had not
exercised the 'authority conferred upon them by the 1943 General
Assembly until he prodded them with his Nashville accusations,
and attempted to lead the people to believe that we had made no
investments. The facts are: " ? ; * ;< A
On September 2, 1943, the Governor and the State Treasurer, with the ap
proval of the Council of State, invested $10,000,000.00 of the surplus money from
the General Fund. And on February 2, 1944, through the same procedure In
vested five million dollars from the General Fund. And on June 27, 1944, was
invested likewise the sum of ten million dollars of surplus money from the
General Fund.
These investments were no state secrets but were announced in
the newspapers of the State. They were reported to the General
Assembly of 1945.
Remember: Mr. Scott was mathematically specific as to the amount of
money that the State has been losing as a result of the failure of the Governor,
the State Treasurer, and the Council of State, of which Kerr Scott had been a
member since January 1, 1945, to Invest surplus cash in the General Fund. He
says that the State has been losing a million dollars a year.
Obviously, if the General Fund is to earn a million dollars a
year in interest, it must have $40,000,000.00 in surplus cash which
can be invested ; and this surplus cash must be invested in long
term federal bonds carrying the highest interest rate, to-wit
At no time between June 27, 1944, when the General Fund investments were
made, and March 1, 1948, did the General fund have $40,000,000.00 in all funds?
both surplus and current. Suppose I had, without legal authority speculated with
the State's money and invested $40,000,000.00 in 2/,% government bonds a year
ago. Today, these bonds would have been worth $1,200,000 less than I paid for
them. They would have earned $1,000,000 in interest, but I would have been
short in my account by $200,000 and would have been criminally and civilly
liable for that amount of money.
Mr. Scott's charge of a million-dollar loss annually in interest
revenues falls of its own weight. The amazing part of it is that
it was made by a man who was a member of the State Adminis
tration and who as a member of the Council of State had a re
sponsibility to keep himself advised about state finances.
It wa? not until the March It income tax oollectlona of thla year that the
General Fund had any exctu money that oould be lnvuted.
Thi General rund itarted thla currant Meal year with about 117,000,000 on
dtposit in tht mora than too banki of tha state. (Tonight I ihall uaa round flg?
Urea for tha convenient of my hMfttl.)
Wai thin too much monay for the Central Fund to have in eaah depoaite at
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the outset of a fiscal year? Bear In mind that this fiscal year the General
Fund will spend approximately $96,000,000, or about $8,000,000 a month. On
July 1, 1947, the General Fund had on hand just enough to finance the State's
expenses for slightly more than two months, and by January 1, 1948, the Gen
eral Fund cash had been reduced to $12,700,000 or there had been disbursed
$4,600,000 more than the General Fund actually took in revenue. Furthermore,
on January 1, 1948, commitments outstanding against the General Fund were
in excess of $52,000,000.
During March, income tax payments were made into the General Fund.
Consequently, on April 1 the State had a sum in excess of its commitments for
the next three months and invested $15,000,000. Later, it may be advisable to
make investments. If so, you may be assured the Governor, Treasurer and
Council of State will act with the. best in collective wisdom. Acting alone, the
State Treasurer cannot Invest a single dollar of the State's money anywhere.
There are other funds. The State Highway fund and the Permanent Im
provement fund on March 31 totaled $98,000,000. These funds cannot be in
vested; the law will not allow It.
Bear in mind, too, that whenever it was prudent and legal to Invest state
funds such investments have been made. I refer to the Sinking Funds, the
Post-War Reserve fund, Teachers' and State Employees' Retirement fund, and
Local Government Employees' Retirement funds. Investments totalling more
than $150,000,000 have been made.
As State Treasurer of North Carolina I have handled hundreds of millions
of dollars through my office. Every dollar has been accounted for. In addition
to regular periodic audits, my books have been audited fifteen successive times
without the disclosure of a single irregularity. Every dollar of state money en
trusted to my keeping either is invested in the strictest accord with law or is
?n deposit in the more than 200 banks of North Carolina, amply secured by legal
collateral.
As I stated before, I had hoped to conduct my part in this campaign above
the level of personalities. I still feel that way about It and in the future I ex
pect to discuss matters of constructive Import to our people.
But, when a man has done his full duty. It is not unreasonable for him
to resent false accusations designed to blacken his reputation in the eyes of
the people whom he has tried to serve.
Kerr Scott's charge that I have failed to do thy duty under ' Chapter 2 of
the Public Laws of 1943, and that in consequence of my delinquency the State
has been losing a million dollars a year, Is false. The Implications contained in
his quoted speeches appear to me to be contrived to reflect upon my Integrity
as a high officer of the State, and I resent the same with all of my being. Even
worse, he Is attempting to deceive the people of the State; without a con
structive platform except a "me, too" one he has turned In desperation to a
campaign of criticism to blacken my name and divert attention from hit own
incapabilities. The people will not be deceived.
I have not violated either the spirit or the letter of the law. Kerr Boot haa
violated the Ninth Commandment. He hae borne falie witness agalnit a
neighbor,
CHARUES M. JOHNSON
(Political Advertising)