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the alliance-independent:
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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." .
