The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1904-05-25
The SCHOOL FUND.
A Smith County Transaction
Which Casts Reflections.
Member of School Fund Com
mission Profits by His
OWN OFFICIAL ACTION.
Secretary BurrOW Declares
Nothing Wrong or Illegal.
A Case Ready for the New State
Accountant.
OWN OFFICIAL ACTION.

Here is a case ready for the state ac-
cOuntant, Rowett. appointed this
morning.
A story has gained considerable cir
culation to the effect that the school
fund commission has purchased bonds
at par, but minus several years inter
est coupons which went to the profit of
a company in which Secretary of State
Burrow is the largest stockholder.
Secretary Burrow is emphatic in the
statement that there is nothing irregu
lar or wrong in the transaction and
pons from bonds which could not other
wise be secured at par-the law not
permitting purchases above par.
AS the transaction appears to reflect
upon the secretary, in justice TO him
and to make sure that the state has
not suffered the accountant should
conduct a searching inquiry into the
affair.
Is the permanent state school fund
being invested for the best interests of
the schools of the state?
The information recently brought to
light seems to show that one member
of the school fund commission has
bought bonds in which he is interested
in such a way as to make a profit for
himself.
In March, 1902, the city of Smith Cen
to SIT 900. They were registered by the
state auditor on March 25, 1902, and J.
r. Burrow, now secretary of state, paid
the registration fee. They bear per
on February 1 and August 1 of each
year. The first ten bonds were payable
one each year, beginning with 1902, but
the last seven ran until February 1,
1922.
These bonds We're purchased by the
Home Investment company of Smith
Center, of which Mr. Burrow is the
principal StOckhOlder. On January Y,
1903, within ten days after Mr. Bur-
row became secretary of state, and
member of the state school fund COM
mission, all but the first three of these
bonds were bought by the state school
fund commission but unpaid interest
coupons amounting to 81 100 were lip
ped from them and kept by the Home
Investment company.
This means that the state school fund
is not now receiving any interest on
this investment and will not receive
any until February 1, 1906 One OF
these bonds is due August 1, 1905, and
all of the coupons were clipped from
that, so that the state receives no in
terest whatever from its purchase of
this bond. although it will have held it
two years and a half
This bond deal is coming in for a
great amount of criticism from people
who know about it. Especially is Mr.
BurroW criticised. 1t looks as though
he purchased the DOnQS from Ills llolAlC
town at five per cent and then within
nine months turned around and acting
in his official capacity bought them for
the state school fund from himself
allowing himself to clip off and keep
the first 100 worth of interest cou-
pons.
Mr. Burrow says this is customary
when bonds can be secured by the
state school fund in no other way. 1t
is true that this has been done since
there has been a scramble for Kansas
bonds but so far as is known no other
bond commissioner has ever De1ore
made himself the Deneuclafy OF the
If the city officials of Smith Center
did their duty according to law, the
state school fund commissioners must
have had an opportunity to purchase
these same bonds at the time they
were issued, and if so they evidently
turned them down. If the Smith Cen
fey officials did not offer them to the
state school fund commissioners they
were guilty of a misdemeanor- The
law provides that when county
municipal or school district bonds are
issued in Kansas they must frSt De
offered TO the state school fund unless
thew are sold above par. Then II the
state school fund commissioners do not
want them they can be sofa 10 olher
Darties for whatever they Will bring.
Asked about the deal, Mr.. BurrOw
1T is true that the school fund
commissioners purchased InOSe
bonds and that a certain number OF
coupons were clipped off. They were
< per cent bonds and the state bought
them on per cent. basis The only
way in which that can be managed
Is 70 allow the sellers of the bonds to
elm off enough interest coupons to
bring the total amount of interest the
state will receive down to 4 per cent
I doubt myself if it is a good plan to
do this, but when there is a big de-
mand for bonds it is the only way to
keen the state school fund invested.
ut is true that I am a stakeholder
in the Home Investment company
which sold those bonds In fact 1 am
the principal stockholder in it. The
way I came to buy those bonds was
like this: The city council held a spe-
ciaI. meeting one day to consider the
sale of the bonds. They had been fig
uring with an outside bond broker,
and I had known nothing about it
until that morning some of the city
officials came to me and asked my adj
vice about the brokers' proposition
The broker proposed to handle the
bonds at per cent, 1 per cent. of
which was to be cash. I was just go
ing away and did not have time to
figure on the proposition. but I told
the city people that if they wanted to
was willing to take them at the
way I came to have them"
These bonds were numbered from