The independent., 1902-11-20
THE SCHOOL FUND

ferred to him as F. Necessity" Prout,
because, as Senator Allen so kindly
showed in the Madison Mail, ''Neces-
sity knows no law" But there is an
other adage which declares that Nee
{ -sity is the mother of invention"
and it is from this standpoint that we
shall use the term this time-always,
however, reserving the right to in
tend the other meaning when the at
tOrney general acts as he did in the
Standard Oil case, the starch case, and
others similar. Besides, we have a
notion that Norris Brown or w. L.
Rose really studied out the ingenious
argument we are about to mention.
AS is we'll known to those who real
ly keep in touch with state business.
the greatest problem in Nebraska gov
eminent today, not excepting the tax
problem, is how to keep the educa-
tional trust funds invested. Under
Auoioi GULL dtlou pei luduCut
practice was made of buying general
fund state warrants as an investment,
and this gave temporary relief. But
it ought not to become a fixture in
Nebraska finance, because it means
permanent floating debt-paradoxical
as that may sound-and good finance
requires that the state do business on
cash basis, which would wipe out
warrants as a possibility for invest.
ment.
Section of the constitution of Me-
braska, after reciting that these FUNDS
shall remain forever inviolate and
undiminished, goes on to say that
tney shall not be invested or loaned
except on United States or state Sc
curities, or registered county bonds of
this state" The supreme court has
held that a state warrant, issued
against tax levy duly made, is
state security" within the meaning
of this constitutional provision. But
the question has never been raised un-
til now just what might be included
in the term "state securities" 1t has
usually been the opinion of those who
had charge of making these invest
ments that Nebraska state securi-
ties" were the only ones constitution
ally available. -
After some dickering with a firr,
dealing in state bonds, the present
board decided to buy 100000 of Mas
sachusetts state bonds at a figure
which will net the school fund 3 per
cent. The legality of this course was
presented to the attorney general and
he advised the board that the term
state securities" includes the bonds
Of any state in the union, arguing that
the words "Of this state" applied to
county bonds were added Intentionally
in order to prohibit the purchase of
bonds issued by counties in other
states. The punctuation and language
seem to bear out the attorney gen.
erals contention. Although the deal
has been arranged, yet in order to be
sure about the matter, Treasurer Stue-
fer will refuse to pay for the bonds and
a writ of mandcmus will be asked fer
Of the cupreme court to compel him
to do so, and thus the whole question
can be judicially determined. The In
dependent compliments these gentle
men for adopting this course, which
IS in sharp contrast to their acts IN
he matter of converting a school land
ease into a sale contract
What the court will do is, of course,
1 matter of speculation. There is
title doubt that the constitution would
lot be violated by the purchase of
state bonds if the ques-
ion hinges solely upon construction
IF the English used in tho uunted con.