CHAPTER II 
STATE AND LOCAL INDEBTEDNESS 
(Gros oa i policies in respect to public bor- 
rowing vary widely. Some governments take the 
stand that the pay-as-you-go policy should be ad- 
hered to strictly except in extreme emergencies. Others take 
the opposite view that borrowing is justified, provided that 
the credit of the government does not become unduly im- 
paired and that the purposes for which the borrowed funds 
are to be used warrant recourse to this method of financing. 
Continued financing on the latter basis frequently results 
In an embarrassing situation, unless full provision is made 
for the funds required to meet interest and redemption pay- 
ments at the time the indebtedness is incurred. If such pro- 
vision is not made, the result in some cases may be an 
eventual impairment of credit, for few governmental units 
are so fortunately situated as to be able to finance any con- 
siderable volume of indebtedness without providing addi- 
tional sources of revenue or augmenting the amounts ob- 
tained from existing sources. On the other hand, extreme 
adherence to the pay-as-you-go policy may restrict the de- 
velopment of governmental activities to such an extent that 
government may be charged with failing to make adequate 
provision for the well-being of its constituents. This is 
particularly true in a period of rapid social and economic 
changes. 
As will be seen, government in Missouri has not followed 
either extreme. The state government throughout its his- 
tory has at times been almost on a pay-as-you-go basis. At 
other times borrowing has been resorted to freely, and even 
constitutional limitations on the borrowing power have been 
modified when circumstances seemed to warrant such a 
change. Similarly, the borrowing policies of local govern- 
ments have undergone a series of changes, although the 
changes cannot be traced so readily as in the case of the 
state government.