Omaha daily bee., 1897-01-08

biennial perlod, December T. 1894. there were
| on hand of these funds the following
amounts, to-Wit:h
Permanent sehd61 .Sli7. .0sL 6}
Permanent university. 1855 63
Agricultural Sndbwmcnt............ 6l.9-5 l5
Making the sum total of......S .S52S 55S.i1
These several funds. by decision OF the
supreme court, do not come within the pro-
visions OF the depository law, and were
| therefore under che control and disposition
OF the state treasurer when not invested RS
above provldednanh when idle and unnvestcd
were of no heneht to those who should
derive advantage from the interest in case
| OF an investments In interest-bearing secur-
| tiles, as contemplated. During the last bi-
ennial period hut few county bonds have
been issued and these were chiefly refund
ing bonds to take up other outstanding in
debtednoss. Hence 1t has been extremely
difficult to secure for the state enough OF
county bonds to absorb the accumulation OF
these different funds. to say nothing OF the
large amount on hand at the beginning OF
the biennial period. During the year 1895
the Board OF Educational Lands and Funds
obtained only the sum of $40 coo, being Otoe
county rcfunding bonds, bearing interest at
the rate OF AZ per cent. These bonds were
obtained at par During this time large
amount OF state warrants drawing per
cent interest. were being issued from time
to time. regarded these warrants as de
Slrable investments for these trust funds,
inasmuch Gs 1t would provide a ready
means for the investment of the entire sum,
strengthen the credit of the state and bring
its warrants which were below par, to par
value, and, in effect, put the state on a cash
basis.
In decision OF the supreme court, con-
Cured in by all of the Judges and found in
the Twenty-ffth Nebraska, at page 66O, 1t
was decided that state warrants were state
securities within tho meaning of the consti-
tutional provision referred to-. In addition
to this precedent had been established by
the purchase of these warrants under the
administration of my predecessor. Governor
Crounse The supreme court also in a
more recent case, referred to the first de-
cison above quoted in the following afirma-
tory language: I'VE must not, however
be understood as holding that warrants
against the general fund are not state Sc
curities within the meaning of the constitu-
tion. Although that question is not pre-
sented by this record following In re State
warrants, 20, Nebraska 659, and STATE az linst
Bartley. supra we assume them to be legti-
mate investments for the permanent school
fund; but IL the state, as trustee for said
fund, desires 20 invest in that class OF Sc
curities 1t is required to do so on terms of
equality with other investors"
OVBRRULED SUPREME COURT
Assuming, therefore, that warrants of this
character were legitimate investment for
this large fund, and as they were in every
other respect a very desirable form of in
vestment, | introduced resolution before
the Board Of Educational Lands and Funds,
at regular meeting in January, providing
for investment of $780, 900 of this idle fund
in warrants already issued and those there
after to be issued. Some doubt was eX-
pressed by some of the other members Of the
board respecting the legality of an invest
ment Of this kind, and, at their request, the
resolution was referred to the attorney gen
eral for an opinion which was finally rem
dered at a regular meeting in April following.
This opinion was, in effect, adverse to the
decisions OF the supreme court cited above,
as well as to the precedent established
during the administration of Governor
Crounse. The attorney general held that
state warrants were not state securities and
were not legitimate Investment under the
provisions of the constitution. The opinion
was concurred in by a majority of the board,
thus cutting of every avenue for q speedy
and profitable Investment of this fund
Another resolution was then introduced by
me looking toward the Investment of the
unemployed school fund in United States
bonds. In this effort to find the best possible
Investment, after we were prevented from
purchasing state warrants, / failed to re-
ccve the cooperation of any other member
of this board, and no Investments were made
in that direction.
Registered county bonds, the only remain
ing investments permitted by the constitu-
tion, have been purchased from time to
time as reported in detail by the state treas
urer. These bonds have been purchased
upon a basis OF Interest of AZ per cent or
more. 1t will be observed that there IVES
secured for the investment OF the permanent
school funds county bonds in the total sum
Of S345 7il.92. There now remains of these
trust funds as shown by the report of
the state treasurer, the total sum of $685.
55S.41.
A constitutional ouapdmapt ,royi1ipr Tor
the Investment Of this fund in school dis
trict warrants, as we'll as specifically naming
state warrants as legitimate investment
was submitted to vote OF the people at
the last election, but it's adoption is as yet
a matter OF uncertainty ] think however
can safely assume that in any event the
Board of Educational Lands and Funds, as
constituted by the election of the present
officers. will cooperate with me in the in
vestment of this fund in the state securities
mentioned, which, II successful, will furnish
an ample opportunity for the profitable in
vestment of this entire fund. Yet / am
of the opinion that as nearly as practicable
1t would be advisable, by constitutional
amendment, to make more comprehensive
provisions for the investment and manage
ment of this trust fund which is constantly
increasing, and which in time will grow to
enormous proportions. This fund is the
patrimony OF the children of the state to be
invested and the interest applied for their
education Such a magnificent endowment
is well worthy the Jealous care and watch
fulness of these entrusted with its custody,
and 1t is of the utmost Importance that
provisions be made for its investment upon
advantageous terms, and yet with all
reasonable precautions for the permanent
safety of the principal How soon this may
be brought about is perhaps yet uncertain.
COST OF STATE INSTITUTIONS.
Total Shows an Increase, but Per