Los Angeles herald., 1892-12-08
IRRIGATION BONDS AND THR SCHOOL
FUND.

is now in the hands OF the state printer,
contains number of suggestions and
recommendations that are of more than
passing public value. 1t is we'll known
that the moneys belonging to the state
school fund, some 100000, are now
short about 100000 This has grown
out of the fact that the loans have to be
made on county securities alone, and
that during the past ten or fifteen years
these securities have greatly appreciated
in the investment market. In order to
secure county securities the state board
of examiners has been compelled to pay
premiums for these bonds, and by that
means the principal has been go far in
fringed dupon as to now amount to de-
fcit of about the amount stated. OF
course the legislature will have to make
up this deficiency some time or other,
and the encouragement has therefore
devised the plan to include, in the Sc
curities that the school moneys can be
loaned for, irrigation bonds. These are
now at a discount, and by taking ad.
vantage of the market as it is and as it
will be for some time, the amount lost
to the school fund by the paying of pre-
miums will be soon recouped by buying
irrigation bonds at the prevailing dis
count.
There are several valid reasons why
the field of possible investment of the
school funds should be enlarged go as
to include irrigation district bonds. The
first is, that whenever all the req uire-
ments OF the Wright act have been com
piled with las is easily ascertainable un-
der the machinery OF the law they con-
stitute as safe security as county
bonds. They derive their value from
the fact that the entire property in the
district is pledged for their redemption,
and in this respect they form as safe a
basis for loan as the county school
bonds.
The irrigation bonds of the best dis
tricts are now bought at from 80 to 95
per cent by bankers and dealers in se-
curties. 1t is possible that the amend
ment to the constitution, just adopted,
with reference to municipal indebted
ness, may include irrigation districts.
If so, these bonds would be greatly ben
Gifted in the money market, for a secure
loan that has forty instead of twenty
years to run before maturity s much
more sought after than those of shorter
duration.
Another advantage which would &C.
crue from including irrigation bonds in
the public securities that the school
fund could be loaned on would be that
the moneys used in bringing our great
irrigation systems to profitable perfec-
ton would be kept in the state. The
interest would be paid here, and the
princ.p pal. when due, would not GO out
Of the state.
The board OF state examiners who
have charge OF the school fund loans are
effectually estopped from using the
money to advantage by the present re-
striction of the law. II they go on pay
ing large premiums for county bonds,
and the deficit is not replaced by the
Legislature, the principal will be go far
eaten into as to make the shortage very
formidable. The board will be COM
PEELED in selfdefense to stop investing
in county bonds, and then the schools
will suffer for want OF the usual divi-
sion OF the pro rata OF the earnings of the
principal.
If further legislation is required to
strengthen the security of irrigation
bonds, the legislature should furnish it.
The irrigation districts have come to
stay. The Wright law has furnished
the best legislative basis yet devised to
create irrigation districts that will prove
lasting and beneficial, and as experience
shows what further legislation is needed
to perfect the system that legislation
will be enacted.