Omaha daily bee., 1911-04-08
STATE BONDS NOT WORTH PAR
State Treasurer Will Find Difficulty
in Selling Them.
AMENDMENT A STUMBLING BLOCK
Nebraska Has over -Four million Dol
lars Tied Up I'm Securities, which
VIII he Sold 70 the High
est Bidders.


ing OF the foreign state securities. in which
more than $4,000 600 Of school funds are
invested, is the earnest opinion Of those
" no are familiar with the conditions that
exist. While the bonds offered for sale
TO the highest bidders who submit their
proposals to State Treasurer Walter A.
George on or before April 20 are gilt-edged
in every respect, the market conditions
at the present time will not permit pur-
Chasers to buy at a prort
Under the recent legislative act authoriz-
ing the sale OF these bonds it was antici-
pated that the money could be reinvested
in Nebraska municipal and county bonds
at higher rate Of interest. but there Is
an amendment to the bill which appsr-
emily, Will knock such plans galley west.
A fight was made against this amendment,
and some Of the state officers saw the i'm
portance Of eliminating it. but 1t was
passed nevertheless
This amendment which was recon-
mended by the senate judiciary committee.
provides that the board of educational
lands and funds shall in reinvestinE the
funds from the sale of the bonds offered
buy only direct from the authorities maxi
ing the issues. 1t further provides that
the state must make it's purchases in the
order In which the requests by the various
! municipalities are filed with the state
treasurer.
To Purchase Direct.
The full text of the amendment reads
that in the reinvestment of such funds the
state Board of Educational Lands and
| Funds shall purchase all bonds direct from
! the authorities issuing the same, and in
the order in which they shall be offered
TO said board, and for the purpose of ad-
vlsing authorities having such bonds as
to their rights herein it shall be the duty
| Of the said board to number all offers
| made and to notify said authorities OF such
numbers.
THE intent of this amendment was I'm
doubtedly prompted by a spirit of con-
scientious endeavor to protect the funds
| from possible graft" declares Harry Mott,
the well konwn dealer in investment bonds
but II will not bring about the desired re-
suits. The most dangerous defect In the
amendment appears to lie in the fact that
there Is nothing to prevent authorities
forcing the state to buy bonds at any rate
| of interest they may fix For instance, II
a Nebraska municipality authorizes a bond
issue bearing 2 or 3 per cent the state may
have to take them. What, then would be
the advantage Of disposlng of the stat,
bonds bearing 3 and per cent interest. and
reinvesting in securities bearing a lower
| rate?'
Cannot Sell Below Par.
Getting back to the original subject oil
the proposed bond sale it is declared BY
| Mr.. Knott, as well as others dealing 1r
investment securities, that It will be diff
cult, il not quite impossible, to dispose o.
state bonds for the reason that there il
a provision prohibiting the sale OF the Sc
urities at less than par aud accrued IN
terest. Investment men declare that they
are not worth par under the present
market conditions.
In providing in the amendment tina
bonds in the future be bought direct from
the authorities and that cash ACCOMPANY
all transactions. the Legislature sought t
shut out the middleman or investmen
broker. Men who deal in securities deolar,
that by admitting than they could hav,
taken the state bonds now on hand, and b.
trading and diokertng realized for tn,
state returns near to par as possible
while under the present conditions It will
be a serious problem to dispose Of tn,
bonds which are not worth par by severa
pointR.