The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1904-06-21
SAYS NOT A WORD
Mr.. BurroW Is Strangely Silent
q About Bond Deal.
Offers No Explanation About
Excess Interest.
SCHOOL FUNDS SACRED
System Followed by Commits
siOners Would Violate 1t.
Now Claimed ThatSmith Center
Issue Can't Be Refunded.

member of the state school fund COM
mission, bought from himself as the
principal stockholder of the Home In
vestment company of Smith Center,
$4,000 worth of Smith Center bonds, al
lowing himself to clip off interest cou-
pons amounting to $2,125, fixing it SO
that the state will not begin to draw
interest on the investment until Aug
ust l. 1905.
The people of the state generally are
interested in anything that affects the
permanent school fund This is always
| looked upon as a sacred trust for the
education of the children of the state,
and any juggling with it is not as light
| Iy regarded as might be some other
matters. The constitution itself has
| hedged the fund about with such pro-
visions that it is impossible for the
commission to pay more than par Tor
/ bonds, unless it is done in round
about way, as in the Smith Center case
I Mr.. BurrOW has not, so far as IS
known, said anything about the extra
amount which he clipped from the
! bonds, over and above what the COM
4 mission gave him on the theory the
state was to receive per cent interest
/ on the investment. At present Mr.
! Burrow is in Chicago attending the ma
| tional convention and it is possible that
/ he has been too busy to give the mat
/ ter his attention.
In the figures presented a week or so
ago in the State Journal in which it
/ was shown that Mr.. Burrow had taken
4 $50 in interest from the bonds more
than he was entitled to, the interest
was figured from February 1, 1903. The
/ bonds were really bought by the state
on January %, 1903, and if the interest
4 which should go to the state on q 4
! per cent basis should be figured from
4 that date, it amounts to 1881 more,
total of 1881 which Mr.. Burrow re-
ceived which he certainly ought to re-
turn to the state.
AS the State Journal has stated, there
seems to be nothing Illegal in the fact
| that the bonds were bought and MT
Burrow was allowed to clip and keep
enough coupons to reduce the states
interest from 5 per cent to 4, although
the practice does not seem exactly pro-
per to the average person. 1t does look
| somewhat reprehenSible, however, Tor
/ a state official to take advantage of his
position to do such a thing for his own
personal gain, even though there IS no
law prohibiting him from doing It,
The drawing of Sl3-S1 more Inan
! he was entitled to seems Illegal, how
ever, providing the bonds were
bought on a per cent. basis, as Mr.
Burrow says they We're. II they We're
| bought on that basis the state school
| fund is entitled to receive $6,S73.8l
in interest on the bonds, as anyone
can figure who can figure q problem
in interest. Mr.. Burrow, however, left
| the state only $500 worth of coup
| ons. If he made a mistake and
| clipped off too much he should, and
| probably will, return to the state the
! excess which he received. If it was
not a mistake, but if he took the ex-
| cessive amount Intentionally, why of
course that's another matter-one for
the attorney general perhaps to look
after.
The question arises that If Mr.. Bur
| row was able to buy these bonds in
1902 and get 5 per cent. interest on
| them as a private Individual, was it
nd ali Va n
nine months later for him to buy the
same bonds for the state from himself
at 4 per cent? If the Smith enter
| bonds could not find a market at less
than per cent. in April, 1902, was
the school fund commission COM
PEELED to buy bonds as low as 4 per
cent in January, 1903, ten days after
Mr.. Burrow became secretary of
state?
So far as the financial wisdom of
the deal is concerned, Attorney Gen
eral Coleman and superintendent
Dayhoff are, of course, just as much
involved as Mr.. Burrow, but Mr.. Bur-
row profited personally by the trans
action.
Again, if this practice of clipping
coupons is conceded to be regular, al
though it is virtually paying a pre-
MUM for bonds, which is prohibited
by law, it throws down the bars for
all kinds of deals whereby the school
fund may suffer. Suppose a munich
patty should issue $4,000 worth of
bonds at per cent. to run twenty
years. The school fund commission is
; prohibited from paying a premium
for those bonds, but what is to pro-
hibit one of the members, or some
friend of the members, from buying
those bonds at 1912 That would mean
a premium of 500. There would be
! $4,000 worth of coupons attached to
those bonds at 5 per cent. Then sup
pose this friend of the commission
should turn around and sell the bonds
to the state school fund on per
| cent. basis. On q 4 per cent. basis
: the interest would amount to $4,000.
and he would clip off $4,000 worth
Of coupons-the first that came due
by the way. Thus for his 500 per-
: MUM the friend would receive a re-
J turn of $4,000. Whether any commits
} sion has ever done this sort of bust
ness IS not known, but the illustration
, shows the weakness of the system
which allows the clipping OF bonds.
4 Lawyers now state that this Smith
center bond issue cannot be refund
ed or paid off until the bonds become
) due Practically every other kind OF
z bond which is held by the state school
fund can be paid off at any interest
paying time, except city bonds It is
SAID that the city officials of Smith
| Center We're intending to refund that
: BOND issue in a short time, until this
| deal OF Secretary Burrows came ont
but if it is correct that city bonds can
= not be refunded until they are due
it cannot be done
A boom has been started for p F
Yearout of Emporia for the Democratic
) nomination for secretary of state. The
Gazette says Yearout is out with an ak
trying to kill his boom, and that he
won't accept the nomination unless he
IS drafted
J. H. Harrison. a Kansas man VINO
has been postoffice inspector n charge
J at Kansas City for the past two 81
! three years win be the successor OF
] William H. Cochran, another Kansas
man. as chief postoffice Inspector. This