The Bemidji daily pioneer., 1910-06-29
State Board Of Investments Decides
to Sell Foreign Bonds Now
Being Held.
COUNTIES TO BE LOANED
MONEY FOR IMPROVEMENTS
Decision Will Enable Municipalities to
Drain Much Land Which is ...
Now Swampy. -

At a meeting of the state invest
ment board in St. Paul Saturday,
it was decided that when necessary
to meet applications for money to
be used by municipalities in local
improvements, the board would dis.
pose of the bonds of foreign states
which mature within twenty. years.
These foreign bonds are now held
in the school fund of the state and
Auditor Iverson says that at present
$6, 100000 is on hand. "
The investment board met with
w. R. Mackenzie and W. J. Brown,
county attorney of Marshall county,
who were a committee from the
Northern Minnesota Development
association, for the purpose of dis.
cussing and considering the question
of the sale of bonds of other states
now constituting the permanent
school fund of Minnesota, to obtain
money to loan to the counties of
this state for drainage and other
improvements authorized by law. The
investment board consists of Cover
nor Eberhart, John Lind, Auditor
Iverson, and Treasurer Pettijohn.
Mr.. Mackenzie and Mr.. Brown
pointed out to the committee that a
large part of the school fund of this
state is invested in bonds of other
states. Thus the money paid into
the Minnesota school fund is loaned
to other states for their improve.
ments while some of our counties
find it hard to get money. These
foreign bonds are bearing interest at
the rate of 81 per cent, but the
municipalities are willing to pay 4
per cent. --..
It was further shown that the
swamp land grant of this state was
granted to this state with an express
proviso that the proceeds of the sale
of the granted lands was to be used
first in reclaiming the LANDS by
drainage, and that the association is
not requesting the board to comply
with those requirements but only
that the funds from the proceeds of
the sale of those lands be loaned to
the counties wishing to make the
improvements, and not have the i'm
provements handled by the board
itself. ..@ 4r.a@ .>.~-.~.... a.
The boards attention was also
called to the fact that at time of the
school land grant of this state, it was
provided by constitutional enactment
that the proceeds of the sale of the
lands granted by the federal govern
ment for school purposes should only
be invested in bonds of this or some
other state, but that this consti-
tutional prohibition did not extend to
the swamp land grant of the state
for the reason that original grant
from the federal government was
not primarily for school purposes but
was only appropriated to the purpose
of the schools of this state by sub
sequent state enactment, and that
there has been popular misconcep.
ton of the powers of the state invest
ment board with reference to the
loanlng of this school fund.
1t was argued further that these
drainage bonds Of the countries of
this state are in fact municipal
bonds, having behind them the
credit of the county issuing the
same besides being secured by
assessments upon the lands bene-
fitted, and that the security Of these
bonds as an investm. .ntpf the state
school fund was equal or superior
TO the investment IN bonds Of for
eign states; and because of the
higher rate Of interest paid on
these local bonds and the return
to the state by reason Of the gen
eral improvement within this state,
the board oflnYestment should ex-
erclse It's discretion and sell the
bonds Of foreign states where the
same could be done without sac
ricing the interests of the school
fund Of this state.