urpose of peaceful
social and industrial development. The debts of the American states
have partly been made necessary to meet deficits in current expenses,
but largely of late to erect public buildings, purchase forest lands,
improve roads, and construct canals. The minor divisions are counties,
cities, villages, boroughs, towns, townships, school districts,
drainage, irrigation, and levee districts, fire districts, poor-relief
districts, road districts, and various other subdivisions of states
and of counties. Every one of them has more or less legal power to
incur debts and to levy taxes for the purpose of paying the interest
and of repaying the principal. The purposes for which the debts are
incurred by specially organized districts are sometimes indicated in
the names (e.g., drainage, irrigation), while the regular political
divisions of counties, cities, villages, towns, townships, incur debts
for a large variety of objects, such as streets, sewage disposal,
water supply, electric light or gas plants, school houses, libraries,
and other public buildings. Large expenditures for these purposes are
necessary because the local governments are undertaking new functions,
and either existing equipment (such as waterworks systems, and street
railways) must be bought from private companies or new ones must
be built. They are necessary further because the rapid growth of
population calls for an immediate "capital investment," the payment of
which may be, through borrowing, more easily spread over a series
of years (e.g., in the extension of streets and paving, and in the
provision of school houses for the children).

Sec. 7. #Nonrevenue character of receipts from loans.# The proceeds
from loans (and certain other items of sales) are called nonrevenue
receipts, because they are but in anticipation of receipts from other
sources. The economic theory of such loans is essentially the same as
that of private loans, but it is the people of the political district
collectively that are the borrowers. To get the present uses of goods
they sell their promise to make future payments totaling a larger
amount. The loan is the present worth of those promises. In the case
of loans made for local purposes, provision is now usually made for
their complete repayment within a definite number of years,
usually 10, or 20, or 30. Meantime interest is payable annually or
semi-annually, and from some source an additional sum is collected
to repay