The record-union., 1892-10-14
THAT REFUNDING ACT.
Further Upon the Measure That
Should be Defeated.
Why the People Ought to Leave the
School and University Funds
as They Are.

EDS. RECORD UNION: The views of
State Treasurer Mcdonald, published in
your paper of yesterday, call for pass
ing notice.
While it is perhaps presumption to con-
test with the honorable Treasurer the
value of the proposed Refunding Act, in
his favorite arena of finance, / may be
permitted to make a few observations
touching his exposition of its merits.
He says the Act is almost identical with
the old one .of 1870, which, so far as he
knows, has worked satisfactorily. The
old Act, like the proposed new one, made
it the duty ofthe State Board of Equaliza-
ton to levy an annual tax on the prop
erty of the State to pay off the debt in
installments, the whole to be extin-
gulshed in twenty years. TIE honorable
Treasurer says the Act has worked salts
factorily so far as he knows, but does he
not know that the annual tax to pay the
debt was not levied, and that the debt has
not been eXtIngulShed? Has not the law
worked satisfactorily because its main
provision and its object have been ig
nored for twenty years?
The practice that has prevailed in re-
gard TO 1t is in conSonance with my pub
4Sneu 1uSd, IUdJ the uoDG 10 re-
main and the interest upon 1t at per
cent. paid to the schools. If the Hon.
Treasurer wants to make the new Act
work satisfactorily by the same course of
action as pursued in the last twenty
years, viz: by utterly ignoring most of
its provisions, / am as one with him as
regards the results, but not in The mode.
prefer to see every honest law executed.
The Hon. Treasurer says it would be
impossible under the Act, if adopted, to
get up the bonds and have them sold in
time to meet the debt when due on the
I'd of January, 1893, but it will complicate
matters very much if the time is delayed,
because private parties will demand their
money.
The Act by its own terms cannot take
effect till sixty days after the cleo
ton, which is beyond the day fixed for
the payment of all the bonds. 1t will not
be possible to get ready and make the ex-
change of old for new bonds for several
months after the ID of January. There
are no parties to clamor for their pay ex-
cept the holders Of the S251 900 in bonds
not owned by the State. They will have
chance to clamor from the I'd Of Janu-
airy until the new bonds are prepared.
But will they make much noise if they
receive q per cent. interest for a few
months, when the supposition is they are
ready to accept new bonds at the reduced
rate of 4 per cent?
cial reason why the debt should be
funded now, that it has cost so much for
advertising the law. This reminds me of
the woman who drank all the baby medi-
cine left, because, she said, il would be
great pity to have so much nice medicine
go TO waste.
Another point sought to be made is
this: IF the Act be rejected another Act
would have to be passed by the Legis-
lature this winter and submitted to the
people two years hence, or else the Legis-
lature would have TO provide by direct
taxation for the payment of the debt"
My observation on this is that no sub
mission to the people is required. Only
those Acts to create debt need to be SO
submitted. The Act in question does not
cTeote debt; it provides for one already
existing. The statement that the Legis-
lature would have to provide by direct
taxation for the payment of the debt is
misleading. 1t would only have to pro-
vide Tor the payment of a small part of it
the quarter million in the hands of
private parties on this point it is
proper to say no great strain would be
experienced by doing that.
The State finances have been affected
during two years by an appropriation of
100000 for the Worlds Fair. the nav
ment of claims under the Coyote Act, and
enormous back debts and obligations left
by our predecessors which will aggre-
-.
1t is to be hoped that no such extraordi-
nary demands will be encountered here
after, and if not, is there any reason why
we cannot eXtinguish quarter of mill
ion dollars in bonds held by private par
ties?
The difficulty of the Legislature pro-
viding for paying interest on bonds with
out coupons is only imaginary. We are
doing ii now, and tor all that the new Act
will do will continue to do it for twenty
years. The following extract from my
late article will explain:
As an indication of what may he dome nv
the Legislature, should the people vote down
the Reminding Act, the law of March d 1881
Is cited: Moneys belonging TO the Endowment
Fund OF the state University, to the amount
of $1,000, had been used for State purposes
The Legislature appropriated, to be paid an
nualy, the sum OF ST ,7S5, the same bejng the
interest, at six per cent, on the amount With
held from the University Fund. What was
done in this case can be followed by the next
Legislature, in regard TO the interest accruing
on the Old University bonds, and the bonds
belonging to the common school fund as
wei. An Act appropriating money 10 pay
The interest annually, on all of the debt of the
State, virtually due to herself it is presumed
would be satisfactory to all parties interested
1t should be observed in this connec-
ton, that the proposed new Refunding
Act only provides for refunding bonds TO
the amount of -, SIS, 800, and takes no
cogniZance of the $40, $50 due the Uniyer-
Sity Fund, and as much needing to he
represented in the shape of bonds as the
other SOL, 900 owing that fund. Why
make fish of a part Of the University
Fund and fowl of the other? If grave
complications are feared to arise because
debt is represented by bonds without
coupons, what assurance have we of an
escape from complications in conse-
quence of debt OF $40, $50 Represented
by nothing at all? The truth is, there is
nothing to fear in any case.
In regard 10 the statement of the hon
orable Treasurer, that l have given the
amount of money in the treasury at too
great figure, have only to say that l
gave the amount at the time nv article
was written, but deferred giving it to the
public at once, partly at the suggestion of
the Treasurer himself. +. G. WAITE.
Sacramento. Oct. b 1902