The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1889-07-24
i. 1T SAVES A GREAT DEAL OF INTEREST.
Refunding Of the School Fund Does Not I'M
pose Additional Burdens on Taxpayers.

.. A chance suggestion, a week or two ago,
at the State-house, during O conversation
relative to the act of the last Legislature
providing for the issuance of S3,905, 900 in
bonds to refund the school-fund loan. gave
currency to the idea that the State wOuld
lose money by the transaction. 1t was as
sumed that while the State had reduced its
interest from 6 to per cent. on the loan,
the counties must pay 6, thus putting a
burden of 9 per cent. altogether on the tax
payer. Special kilograms based upon this
assumption went abroad stating that the
State. in its refunding operations IN this
instance, would lose $4,000 annually, in
stead of gaining that much. "Such view of
the matter" said Treasurer of State Lemcke
fund is separate from all other financial
transactions of the State. The fund is the
accumulation of proceeds from the sales of
lands and other sources. On account of
the low taxation for State purposes in order
to meet demands upon it, the treasury has
been from time to time, compelled to Dor
row from the fund. In word, the school
money was used, the State becoming debt
or therefor, and paying per cent. annual
interest. the payments being made semi
annually"
This interest has always been regularly
paid, has il noti' asked the reporter.
Certainly. But the idea was suggested
that there could be large saving in inter-
est if the money was borrowed elsewhere.
and repaid to the school fund. Upon this
the law was passed and we went into the
New York market and got the S3,905, 600 at 3
per cent"
THE money thus obtained was then
placed in the school fund, the State carry
ing its debt at 8 instead of 8 per cent. Is
that itw
Yes; and nearly all the money has been
distributed to the counties on basis of
voting population. Thus, the counties
separately, instead of collectively, as the
State. become debtors to the fund. But.
while they are debtors, they really bear the
relation of custodians of the fund in lend
ing it to the people individually. Such
loans are taken by the people at per cent,
they giving therefor mortgage security. If
all the money is not loaned by county
then, and not until then, are its tax-pay
ers burdened with paying interest on the
school money which theircounty may have
idle. But there will be no trouble about
people at per cent. In fact. many of the
counties have already loaned every cent of
the money they received in the distribution
of the proceeds of the recent sale of bonds.
1t is quite an inducement for farmers
and others who have been borrowing from
capitalists and agents at per cent on
short time to get accommodation from their
counties at per cent. for an indefinite
term. Every dollar of this school money
will soon be held by borrowers. Instead of
have stated. the Legislature has accom-
plished two objects. One is relief TO the
State in reducing the interest it paid from
6 to per cent. which will amount to q
saving annually of Sl17,0O0, and the other
is allowing borrowers to get from their
county officials money at per cent instead
of forcing them to obtain loans from indi-
viduals at per cent"