The daily silver state. [volume] (Winnemucca, Nev.) 1903-1907, 1903-06-26
A FURTHER REVIEW
of State Boards Bond Deal
Explanation

The explanation of the state board
Of education. concerning its transac-
lions with certain L. 5. As. of 1907
submitted TO the public June p, 1903,
through the medium Of the Carson
Appeal, in answer 10 the questions
asked by the Silver State, is before
the people. II is a remarkable COM
nIunication from many standpoints.
II fails to answer the inquiries of
tbs p either directly or indirect
~. For example, the first inquiry
vas, as TO the authority Of the law
the board had for dealing in the Sc
curities belonging TO the state. In
answer 10 this We are told that sec
ton 1887, Cuttings revised addition.
statutes of Nevada, is the authority
relied upon. A reference to that sec
ton conveys the following informa-
ton. 1t is hereby made the duty OF
the state controller, quarterly TO no.
tify the state board Of education of
The amount of money in the state
school fund. and whenever there shall
BE- a sum in said fund sufficient for
investment, said board shall direct the
state treasurer 10 negotiate for in
yestment Of the same in United
States securities. or in the bonds of
this state, or in the bonds Of other
states at the lowest possible rates.
- en- follows a description OF the man
ner in which the purchase shall be
made, and the section ends with the
quotation set forth by the state board
IN their communication.
IL is plain from the reading of tina
Law that the legislature only confer
rod on the state officers the authority
to purchase bonds, when there was
cash money in the treasury, and that
is the reason why Governor Sadler
called the attention of the legislature
of 1901 Il the fact that the state had
these securities, which, in his opinion,
could be made to yield a better in
vestment, if the law was changed so
d. " pElL mt VI LlC SAFE VI L1ESt st
cGrities, and re-inyestment of the
money through the proper authorities,
and, presumably, the legislature of
1901, after submitting the constitu-
~tiOnality of such an act, was advised
10y its then acting attorney general,
that such an act would be ~unconsti-
tutional. Constitution of Nevada, Ar
tiele XI. section 3, general statutes
OF New. sec. 1911 BUT it seems the
present officers did not wait for any
authority of law TO act, but did on
April 2, of this year, and thereafter.
sell and dispose of $685., 600 worth OF
the states securities, and ~re-inYest
the proceeds thereof in a purchase of
Massachusetts state bonds, as evidenc-
ed by the transaction set forth in
their communication, between the
t~reasurere Of the state and Farson
Leach & Co. of New York, wherein
the state purchased of said brokers
S537.00O Of Massachusetts state IS, at
1c2A. which together with the inter
est, cost the state 1858, 7S1.25.
If, as we are informed, these bonds
purchased at that time were selling
on the market at par then the brokers
made S12, 0S2.5 o and the state lost a
corresponding amount
The same brokers at the same time
purchased of the state $4,000 O Z. s.
As. at 10. which together with the
interest paid Melted the state $780,
$685.. These bonds being worth on
the market on that day s1.11h, the
said brokers made on said purchase
$500, and the state lost a correspond
ing amount. To this may be added the
difference between the interest earning
capacity of the government As and
the Massachusetts IS. as shown upon
their face, which amounts TO one ID
per cent and would aggregate a loss
to the state of $40. 900 for the four
years.
SECOND TRANSACTION.
The second transaction consisted Of