The record-union., 1892-10-14
DEFEAT THE REFUND1Na ACT.

November election. 1t now calls atten-
ton to submitted Act of the Legislature
upon which the people will vote on the
Sth of November that ought to be voted
down likewise.
The proposition is to refund the debt of
the State. That is, it is a scheme to re-
fund the school bonds. In reality, the
state owes nothing of any moment, moth
ing that she cannot pay. To refund at a
lower rate of interest is only means to
the increase of taxation, and to give to
the enemies of the free schools the whip
hand. Notably the State University, the
head of our educational system, would
take harm.
In the outset, let it be kept in mind by
voters that the University comes to us by
grace of Federal grants. The money
received for it upon these grants was in
vested in California State bonds years ago,
and when they bore per cent. interest.
The Act to be voted upon provides for
the payment of the State debt, which
amounts to S2,52S, 800. OF this, $751, 900 is
of the University fund, 81, 526, 500 of the
common school fund, and S25I, 900 in pri-
vate hands. To pay this debt, the Act to
be voted on calls for a commission to
issue and sell 81, SIS, 800 of new bonds of the
State, to bear per cent. interest, payable
every six months, in gold; the principal
payable in twenty years. The proceeds
OF the sale of these bonds are to be used
TO take up the bonds now out, but which
1t would be wise to make perpetual.
To pay the interest and principal on the
new bonds, and to create sinking fund,
it is'provided that there shall be an an
nual tax levy. After five years, if there
is any surplus of this tax, it is to be used
as bait to induce bondholders to sur
render. If the surrender does not reduce
the fund to less than $4,000, then the
State is to call in bonds in the order of
numbering. and redeem them, and those
specified in the call are to cease to bear
interest.
Now let US see what all this amounts
to. 1t is set out in the Act that the in
tention is to lessen the burden of taxa
tion." VIII it do it? The debt now
bearing per cent. is to continue at per
cent On its face this appears to be a
saving Off per cent, bat 1t is not, and it
will not lessen taxation. Putting aside
the S25l 600 of debt in private hands, pay
ment of which can easily be provided for
before it is due in 1898, there remains
S2,277 800 of the debt which belongs to
the educational funds of the State-that is
to say, the State owes it to itself for the
benefit of it's school funds.
Every intelligent person will concede
that the schools are not given cent too
much, from the University down. Now
TO refund these per cent. bonds owing
TO ourselves for per cents, will leave
the educational branches of the Govern
ment short 2 per cent. of their present
support. 1t follows inevitably that this
percent. must be made up by taxation
direct. The present system is the best,
therefore, because there is a saving of all
the cost of issuing new bonds, advertis-
ing, etc.-a not inconsiderable sum.
Now of this debt" so-called, $751;, 900
is University fund. When Congress
endowed the University it provided that
it should never invest it's money at less
than 5 per cent. net, and the State pledged
itself to that provision. 1t is matter of
good faith therefore that we should stand
by the contract.
1t follows that the University cannot
reinvest its fund with the State at per
cent. When, therefore, the bonds fall
due in 1898. if the Refunding Act
should be approved by the vote of the
people, the State will have to step up
to the University counter and settle to
the tune of $751;, 900 spot cash.
The Federal Government gave to Cali
fornia, and we accepted with condi-
tions attached, vast quantity of land,
the proceeds of the sales of which were
to be invested so as to produce per cent.
per annum for the support of the Uniyer-
sity. We agreed that if ever this failed,
If ever there was less than per cent.
produced, or if ever the principal suf-
fered, the State would make good the de-
= ticiency. This we made a constitutional
bargain, by putting the acceptance of the
trust into the Constitution and creating
the University public trust.
Already, as the Secretary of State has
clearly shown, the State has used S79, $50
of the University fund, and provided for
the interest on that sum at per cent. 1t
can do the same now if the Refunding
Act is defeated, as it should be-that is, it
can treat the interest accruing on the
University bonds, as well as that earned
by the common school bonds, by provid-
ing for the payment of interest on the
sum annually.
Inis Will simply be taking out of one
iund and putting into another. after all
instead OF taxing direct with attendant
costs. Now, it will be clear to the careful
reader that there is no reduction of taxa
uon III taking up per cent. bond and
substituting per cent. bond, and then
raising per cent. by taxation to meet
certain obligations violated by the
change. 1t viii be wise, therefore, as we
in