Tallulah had her training in North Carolina

my guess: it's referring to southern hospitality, since she says "no-one south of heavens gonna treat you finer" Carolina in particular for the sake of the rhyme, North because... it's not south :)

I thought it was just because it was far away. They wouldn't have travelled as much in those days. Blousie made a massive deal about moving to Hollywood.

http://www.youtube.com/user/sweetiecandykim

I think, like other lyricists before them, they picked it for the rhyme.

If you still care...

I believe that it's a generational hangover from the Old West, when prostitutes became wealthy and gained notoriety as the post-Civil War push westward took place. The Old West territories were boomtowns for prostitutes, with plenty of cashed-up men and little in the way of law enforcement beyond a couple of guys with some guns and a badge- classic Old West.

By the 1920s, the advertising for prostitutes still used the old line 'She's from <insert territorial name>', a reference to her sexual experience- a promise of great sex from an experienced pro. The used the names of any of the frontier states to sell the idea of a wild sexual experience. Prostitution was a little more forthright in those days, and absolutely off the leash in the territories. Kinky.

The first couple of paragraphs of this link explain porostitution in the old west better than I can:

http://www.alternet.org/story/148327/how_19th_century_prostitutes_were_among_the_freest,_wealthiest,_most_educated_women_of_their_time

...and a bit down the page is a section called 'Boom' about the late 1800s boom for prostitution along the line of the frontier.

I think North Carolina was picked by the lyricist for its rhyme, as others have said. But while it should be an Old West territory rather than a founding state, the 'She's from....' is the point of the line- a reference to the off-the-hook prostitution of the Old West and the promise of mind-blowing sex.

This is also interesting...

http://jezebel.com/5988149/brothel-menu-from-1912-is-the-dirtiest-thing-youll-read-all-day

🇦🇺 All the little devils are proud of Hell.