The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-09-06
FIX UP BAD ONES.
Compromise of Western Bonds
Is Nearly Completed.
Cleaning Up Some Old School
Fund Scandals.
GOT BAD SECURITIES.
Some of Them Never Paid Any
Interest.
State May Now Get Back the
Principal.

| of Kansas, the state has saved $50, 900
for its permanent school fund. but in
doing so has sacrificed about $4,000
in defaulted interest. 1t has taken
new 2 and 8 per cent. bonds in place
of the old 5 and 6 per cent bonds.
This work is just being completed by
| Special Assistant Attorney General
John Dawson. under authority of a
special acts of the legislature.
! Mr.. Dawson has not yet filed his
| final reports on his work, as he is still
working on Stanton county, the last
county of the list.
Garfield, Grant, Haskell, Stevens
and Stanton counties were each in
debted to the school fund in about
the same amount. Each county has
sold to the school fund between SILL
600 and 1000 worth of its school
district bonds, issued during the
height of the boom, when these
counties were as thickly populated as
is the eastern portion of the state.
Each county was divided into numer-
Gus school districts, and each school
district voted bonds to build school
house. Sometimes the amount was
only $500, but in some cases, where
rival towns were struggling for SUI
premacy. the school district was
bonded for s2.5OO for the purpose of
building a school house.
In some of the counties there were
as many as twenty school districts
owing money to the state school fund.
fifteen years, and the money which
the state had invested in the bonds
seemed the same as lost. Everybody
had moved away from the schooH
districts; there was no taxable prop
erty; the collapse was complete.
In 1908, when things were picking
up so rapidly in the southwest corner
of the state, Clad Hamilton, who was
then assistant attorney general, de-
viSed the scheme for compromising
the interest on the old school bonds,
and getting the new settlers in the de-
faulted counties to assume the prin-
cipal of the old obligations. He
drafted and secured the enactment of
a law providing the form of bond and
necessary additional authority for the
refunding of the old bonds by the
officers of the school districts now in
existence. Nothing was done toward
putting this law into execution, how
ever, until John Dawson took up the
work.
The general plan has been to take
up the old per cent. bonds,
apply on the principal and interest
whatever balance remained in the
county treasures to the credit of
these funds, and issue new bonds OF 3
per cent, or even per cent, denomi-
nation, running for, fifteen years, for
the full amount of the principal I'M
paid. In this way the state law,
which provides that the school fund
must never be diminished has been
observed.
Bonds in Default.
The first step in these proceedings was
to obtain from the state treasurer d
list of all the bonds now in the school
fund which were in default. With this
list, Mr.. Dawson visited the county seat
of each county which owed the state
money on its defaulted bonds. With the
cooperation of county officials. it was
possible to ascertain the location of the
old school districts, and to find out what
new districts had come into the possess
sion of the old territory. Then by ref
erence to the county records, each dis
trict was allowed the credit on principal
and interest which the county had to
the credit of these various funds. Let
tiers were then sent to all the school Of
ficers in the county, inviting them to
come in and arrange for compromise
of the old bonds to which they had
fallen heir. Usually the school district
officers were willing to accept the COM
promise offered. 1t was simply a case
where they had inherited a bad debt
money Unless they accepted the COM
promise, the alternative would be a
mandamus suit to compel the county
commissioners to levy a tax to pay the
full debt. Under such conditions, the
school district officers naturally were
glad of a chance to compromise.
While the state school fund is loaded
up with only 100000 worth of the de-
faulted bonds there are vast amounts
of the old securities in the hands of pri-
vate owners Many of the old bonds
have been bought up by spectators at
20 or 80 cents on the dollar. and these
spectators are making compromises
with the counties and school districts
at so cents on the dollar, which gives
them a fat profit on their investment.
But there are some bonds which were
IT,
worthless, and probably always will be
worthless. For instance, the town of
Santa Fe, which is the county seat of
Garfield county. issued $4,000 in bonds
when it had a population of about 800
during the boom. The money was used
for sidewalks, street lamps, and water
works. There is now left on the town
site of Santa Fe, two churches, and
ing owned by the county and used as
court house, and a few little shacls not
worth taxing. The total population is
about 40. If a man wants to build a
good house, he goes off the townsite to
build it. If there should ever be a rail-
road built through Santa F'e, a new
townsite would certainly be selected.
The holders of the $4,000 of Santa Fe
city bonds are certainly up against it
good and strong.
Haskell county, of which Santa Fe is
the county seat. also had a thrilling ex-
perience which resulted in its using a
store building for court house. The
county voted $150,000 in bonds to build
court house. The money was put in
the Santa Fe bank. The bank failed
and the only thing the county got was
the building in which the bank had
been located.
The only county which really got out
of the boom in good shape financially
| seems to have been Morton county, the
extreme southwest county of the state,
| which took uD and held all the land
upon which the taxes were unpaid. It
is now offering these lands for sale and
will realize enough from them to pay
all it's debts.
Two Killed in Auto Accident.
Philadelphia, Sept 6.-While en- route
from Atlantic City TO Philadelphia in an
automobile, Dill Wolfe. secretary and