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About The Alliance-independent. (Lincoln, Nebraska) 1892-1894 | View Entire Issue (Oct. 6, 1892)
7 J the alliance-independent: II i BOBBED OF $70,000.00 ! State Officers Ignore the Law, and Set Them selves Above the Supreme Court. HOW POOR MEN BECOME BANKERS. They Rtfuse to Invest the Permanent School Fund in State Warrants Guilty Men Arraigned and Challenged to Defend Themselves The People Must Pass Judgment. -The "There's something rotten in the state of Denmark." Hamlet. Robbed of $70,000! Who has been robbed of that im mense sum of money? The state of Nebraska. How was it done and by whom? It has been done by the republican state officers. They have done it by ignoring the law of the last legislature. It has been done in violation of one of the plainest and most salutary laws ever passed by the state legislature of Nebiaska. The boast has often been made that Nebraska had no bonded debt, but for many years she has been carrying a heavy burden of debt drawing a high rate of interest in the shape of unpaid state warrants. This debt has accumu lated in the following way: Whenever any person presented a warrant on a particular fund in the state treasury and there happened to bo no ready cash in mat iuna, tno treasurer wouio. en dorse on the back of the warrant "not paid for want of funds," and from that date the warrant drew interest at seven per cent. General'y the holders of such warrants have sold them to banks and money sharks who have held them as a permanent investment. There was it is true a law providing for the registration of such warranti so that the state treasurer could know where th ey were and I e able to call them in for payment when he had the necessary funds. But that law wa not obliga ory, and hence was not ob served. Two years ago the treasurer's report revealed the fact that such war rants were outstanding to the amount of $582,000, all drawing inte:est from the state at seven per cent. Dc-iring to promote education the state has wisely provided a fund known as the permanent school fund 'derived chiefly from the sale of school lands, atd the interest of which goes to the support of the public schools of the state. The principal of this fund is in violate. The law requires it to be invested in registered county bonds, United States, and state securi ies, to the the interest on benefit of the which goes schools. Now at the same time that the treas urer reported such a large amount of outstanding state m arrant?, he also reported that $522,000 of the permanent school fund was lying idle in the treas ury yielding nothing for the benefit of the schools. Looking at things in a commonsense way, the farmers whom the people sent to represent them in the last legi-lature wondered why the treasurer did not buy up those state warrants with this money and then turn the interest into the schcol fund "Aren't state war rants 'state securities5?" they asked. They found their answer in a de cision of the supreme court delivered in January 1889, as follows: It was evidently the purpose that the eviiences of indebtedness issued by the state, secured by a levy of taxes to secure their payment, guaranteed and certain as they would be should be deemed "state securities." We are therefore of the opinion that tate warrants drawing interest or that may be made to draw interest by pre sentation to the state treasurer which are issued in pursuance of an appropri ation secured by a levy of tax for their payment are "state securities" within tho provision of the section. This opinion wai delivered by Chief Justice Kcese, and was tho unanimous opinion of the court. "Then why doesn't the board of edu cational lands and funds order the treasurer to invest these idle thousands state securities?' again in these queried the granger legislator. Ha found a ready answer in the fact that Attorney General Leese had already secured tho passage or iust such an order, but the treasurer had ignored the order. Then what was to ba done? "Then," said tho farmer lawmakers, "we'll pass a law compelling the state treasurer to so invest these funds. ,y And they did pass the law but it has been absolutely ignored by the state officers. The law now reads as follows: The said board shall at their regular meetings make the npcessary orders for the investment of the principal of the fund derived from the 6ale of said lands then in the treasury, but none of said funds shall be invested or loaned except on United States or state securi ties and registered county bonds; Pro vided, That when any state warrant issued in pursuance of an appropriation made by the legislature and secured by me Jevy ot a tax for its payment, shall be presented to the treasurer for pay ment and there shall not be money in the proper !und to pay said warrant, the state treasurer shall pay the amount due on said warrant from any funds in the stale treasury belonging to the permanent school fund, and shall hold said warrant as an investment of said permanent school fund. The proviso contains the amendment made by the legislature . Its provisions are perfectly clear. It leaves no room or choice. All the state officers have to do is to execute the law as they h?ve sworn to do. The board of educational lands and unds consists of the following: Governor J. E. Boyd Secretary of State John C. Allen Treasurer.. J. E. Hill ttorney General. .George H. Hastings Commissioner of Public Lands and Buildings A. R. Humphrey A few days ago, the editor of The Alliance-Independext went to the stat3 house to ascertain about what amount of money , had lain uninvested n the permanent school fund dunnc a the past two years. Calling upon Auditor Benton, we were directed to tho state treasury. Capt. Hill being out the deputy refused to give any in formation. Hunting up Capt. Hill, we wero told to come in later and ho would give tho desirod information. Seeing him on the street next day, Capt. Hill advised us to go to Auditor Benton which wo did only to receive a rebuff, but the auditor finally brought forth the treasurer's statement for August, which showed $17G,33.25 idle Jin tho permanent school fund. Finding Capt Hill, we again pressed him for access to the treasurer's books so that we could estimate the average amount in that fund during tho two years. Mr. Mill seemed in disposed to grant this, but finally stated that ho thought the average was about $500,000 which is no doubt very nearly correct. He said about $200,000 had come into Iho fund from the national government and a con siderable quantity from sale and ren'al of school lands. By examining the books in the office of tho commissioner of public lands and buildings we ascer tained that county bonds have been purchased to the amount of $309,000. These (with the exception of $10,000 Banner county bonds drawing 0 per cent,) draw interest at tho rates of 5 and 4J per cent. Tho records show that no bonds have been purchased sinco Sept. 22, 1891, mere than a year ago. The reason for this is tlat counties have not been issuing bonds. Tho board seems very anxious to purchase bondfc ai is shown by the fact that a few days ago they agreed to take a quantity of Dakota county bonds drawing only 4 per cent. Now according to Treasurer Hill's own statement there has been an average of $500,000 dollars , lying , unin vested in the permanent school fund while their has been an average of over $ouu,uuu oi outstanding warrants on which the state is paying 7 per cent interest. If the law requiring the treasurer to invest the permanent chooi fund in warrants had been obeyed, this $510,000 instead of yielding the state no revenue, would have yield ed in the two years of Mr. Hill's present term $70,000 for tho benefit of the pub lic schools, On the o'her hand $.500,000 of those outstanding warrants which could have been nought in w!th this fund have been held by bink nd money sharks to whom the state has pa;d $70,000 n clean cash. Is there a man of ordinary iutelle- gence in Nebraska who can not see that i he sta'e has been robbed of $70,000? The next question is WHO ARE TFIE GUILTY PARTUS? At first view, the facts would seem to fix the guilt wholly on the state treasurer. B it wo are inclined to think the other members of the board of educational lands and funds are as guilty as he is. Why have they not taken action on this matter? Why have they not issued an order directing the treasurer to purchase these war rants? In the minutes of their meet ings there is no acc unt of any action or discussion on this matter. On the contrary they have sought high and low for county bonds (according to their own statement) and have even ordered the purchase of bonds drawing only four per cent. But there is another reason why we believe the other members of the board guilty. But before stating it we will remark that the money tbat is supposed to be lying-idlo in th treasury is not in the treasury, neither is it idle. When tho last houso of representative ap pointed a committee to investigate the subject, Treasurer Hill absolutely re fused to state where this money was. There is no reasonable doubt that this money is being used as banking capital by somebody. And this bring9 U9 back again to the question: "Who Is guilty?" Now It has lately come to light that Secretary Allen has become a banker. He was a commercial traveler and a merchant in a small way out at Mc- Cook before he was elected. His salary is $2,000. Yet he is now Vice-Presi dent of the Windom bank at University Place. He is also a stock-holder and director of the Industrial Savings bank at Lincoln. Attorney General Hastings was a lawyer with a limited practice beforo elected, but now ho is able to go into the banking business. He i also a stockholder in the Industrial and Sav ings bank. ' And treasurer Hill Is a banker too. He is Vice-President of the Industrial Now is it within the bounds of reason that these men, who camo to Lincoln comparatively poor men, and have drawn salaries of $2,000 a year, could n so short a time rise to such high wsitions in the financial world on their own capital? Are wo not forced to be- ieve that theso men are using the state's money as banking capital? But tho permanent school fund Is the only fund that Allen, Hastings and Humphrey have any control of. Are we not then forced to the further con clusion that they are responsible for wltholdlng that fund from investment under the law requiring the purchase of sta'e warrants? , At present theso things are beyond the reach of any investigation that can bo made by any private citizen. Hence it is impossible to secure direct positive evidence. But every circumstance points to the truth of the following proposition. That these state warrants are being bought up by bants and money sharks with the money belonging to the permanent school fund, and that tht members of the board of Educational lands and Funds, who are responsible for the violation of the law, are receiving a portion at least of the interest on I hes; warrants. And we here and now caUengo these men to show the contrary. If this is a true statement of affairs regarding the permanent school fund of the state, as we firmly believe it is, these men ought to ba candidates for the penitentiary instead of candidates for re-election. They deserve the con demnation of every honest' man, the contempt of every honorable man, the execration of every patriotic man. We have laid this case fairly before the voters of this state. Let them prepare to pass judgment at the ballot box. Mr. Shamp is pushing his campaign vigorously in the first district, and is gaining ground daily. Speaking of the situation in Ala bama, congressman Oates, the leading democratic representative from that state says: "I am afraid our situation is critical. To carry Alabama for Cleveland is go ing to take hard work and lots of money. I have not ben home very long, but I find many democrats leaving the party. Something must be done at once. Still I have confidence that e can arrange matters before Novem- er." .