The Eureka sentinel. [volume] (Eureka, Nev.) 1902-current, 1903-07-11
SCHOOL BOND
EXPLANATION
AREvIEW OF THE BOARDS DEAL

tion Was Buncoed Into sn Uniaw-
fuI Transaetion and That the state
Is Loser.
From the wiLnemuccs Silver State. June 26.
The explanation OF the State Board Of
Education, concerning its transactions
with certain United States As OF 1907,
submitted to the public June 81, 1903,
in answer to the questions asked by the
Silver State. is a remarkable communica-
tion from many standpoints. 1t fails TO
answer the inquiries Of this paper, either
directly or indirectly. For example, the
first inquiry was, as TO the authority OF
the law the Board had for dealing in the
securities belonging to the State. In
answer to this We are told that Section
1887. Cuttings revised edition, Statutes
OF Nevada, is the authority relied upon.
A reference to that section conveys the
following information:
ut is hereby made the duty OF the
State Controller. quarterly to notify 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 to negoti-
ate for il vestment 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"
Then follows 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 com
munication.
1t is plain from the reading OF that law
that the Legislature only conferred on
the State officers the authority to pur
chase 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 to the fact that
the State had these securities, which,
in his opinion, could be made to yield
better investment. il the law was
changed SO as TO permit OF the sale OF
these securities, and reinvestment oil
the money through the proper authori-
ties, and, presumably, the Legislature Of
1901, after submitting the constitution
ality OF such an act, was advised by its
then acting Attorney General, that such
an act would be- unconstitutional. (Con-
stitution OF Nevada, Article XI, Section
3, General Statutes OF Nevada Section
15l.) 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., 900
worth OF the States securities, and re-
invested the proceeds thereof in pur-
chase OF Massachusetts, State bonds, as
evidenced by the transaction set forth in
their communication, between the Treas
urer OF the State and Farson, Leach &
Co., of New York, wherein the State pur-
chased OF said brokers $537 900 OF Massa-
chuset,s State Re, at 1929, which to-
$553. 1925.
II, as We are informed, these bonds
purchased at that time were selling on
the market at par then the brokers made
sl2,OS2 so, and the State lost a cores
pondng amount.
The same brokers at the same time
purchased of the State 100000 United
States As, at ITO, which together with the
interest paid netted the State $3.50. 1888 .35.
These bonds being worth on the market
on that day $1.1lt, the said brokers
made on said purchase $500 and the
State lost a corresponding amount. To
this may be added the difference be-
tween the interest earning capacity OF
the government 4s and the Massachusetts,
80 as shown upon their face, which
amounts to one % per cent and would
for the four years.
The second transaction consisted OF a
statement, between the State OF Nevada
in account with the National City Bank,
chased $lS9, 900 of Massachusetts, 3las,
at 1923. which together with interest
and charges, cost the State $205, .25.
Ii. as We are informed. these bonds
were selling at par in the market the
State made losing in this transaction Of
$l4. .34S.25. and some one made CORE
spending gain OF that amount. The same
parties at the same time. purchased OF
the State $iS5,0O United States As OF
1907, at Ills, paying therefor the total
sum of s205,5Sl. The market value Of