The Lambertville record. [volume] (Lambertville, N.J.) 1872-1968, 1891-09-02
THE STATE SINKING FUND.
A Dwindling Quantity and a Brief Sketch
OF the Whole Matter.


The dwindling away of the State Sink
ing Fund is an example of the dangers OF
large funds held for public purposes. In
1864, when the fund was established, it
was confidently expected to grow until
finally to be large enough to extinguish
the war debt. To-day this scheme is ad :
mitted to be failure, and the income
from the 1858, 900 nominal assets is not
sufficient TO pay interest and expenses
BY law 100000 is TO be annually contri-
buted to the fund from the ordinary in
come OF the State, but this amount has
been increased annually in the shape of
loans, never to be repaid, until this year
the amount of the loan aggregated 1927
Ss9. The next year it is estimated that
$lS3,778 will be necessary
The sinking fund and the debt sought
to be extinguished by it are relics of the
civil war. For the purpose of equippng
regiments and paying bounlies the State
issued bonds to the amount of So. 500. GOO
att per cent, the last OF which is payable
in 1902. The high rate OF interest and
the gllt.edge character of the security give
the bonds high financial character and
they were eagerly sought after. They
are never offered on tho market nova
days because the rate OF interest cannot
be lowered and investors rarely part with
them. The Federal Government repaid
the State portion OF the amount expend-
ed in,equipping regiments and in 1864 the
sinking fund commission was established
to take charge OF this money and care
fully invest it, and the income derived
from II. The Commissioners commenced
with $276, 600 in the Treasury, which
they invested in State bonds. The fund
rapidly increased. In 1881 amounted to
81, 200, 044; and 10 1877 to 81, 500, $40.
and the debt decreased to 50, 396, 800. 1t
was during the seventies, however, that
the investments were made which has
put the fund in its present condition. 1t
was necessary to invest the money, and
loans were made on bonds and mort
gage which at the time were considered
perfectly good. The drop in real estate.
especially In farm land, has nearly used
up the fund. The principal assets now
on hand consist of bonds and mortgages
5000, 81 6.68, and real estate at cost $2l6,-
417,6 OF. These estimates are mere guess
es, AID 1t is safe to say that when the as
sets are realized upon, there will be a loss
of more than 30 per cent.
AS far back as 1880, the most glowing
hopes were entertained OF this fund. A
law was passed in that year providing
that the interest and $4,000 shall be
taken from the fund annually and paid on
the principal. The Commissioners then
reported that they had no doubt but that
within ten years the fund would be suffi-
Gent to meet and extinguish the war
debt. 1t Is now known that this Is i'm :
possible. The last Legislature abolished
the commission in charge OF the fund and
placed 1t under control of the State Treas
urer, who intends to convert tho assets
into cash at once. The real estate has
been greatly reduced In value, and its
care involves so great an expense that It
is considered the part of wisdom to dis
pose Of 1t as rapidly as possible. The
bonds still outstanding amount to 81 ,o9e.
900, which are payable at the. rate OF
about 800, 900 annually, and 1t is safe to
say that most Of this money and the inter-
est will hereafter come out of the State
ordinary receipts. Jersey City Journal