SINKING FUND.
On motion of Mr. NEWCOMB, the House took up the consideration of the Sinking Fund bill, [ S. 102, see page 105 of these reports,] the question being on Mr. Shuey's amendment.
Mr. SHUEY withdrew the amendment.
Mr. NEWCOMB proposed to amend the 3d resolution by striking out and inserting new matter, giving the State Auditor the same power of the late Sinking Fund Commissioners with reference to the incidental expenses; he shall preserve vouchers and report to the next, General Assembly; and that the Auditor shall be allowed $1.000 a year; and appropriating $2,000 for clerk hire - such clerks, to be appointed by the Auditor.
Mr. BOBO said, he supposed the object of the bill was to curtail the, expenses of this fund. He counted it up to six or seven thousand dollars, a year. There was no economy in this amendment. And he understood that the Auditor's office was now worth ten or twelve thousand dollars.
Mr. WOLFE objected to the bill, because it, diminished the school fund.
Mr. BELFORD stated his understanding of the bill - the amendment requiring the Auditor to do the work of the Sinking Fund Commissioners, all for $1,000 a year, and $2,000 for clerk hire. He showed the expenses of the Sinking Fund management, for the last six years to have averaged over $10,000 a year. He would not build up a cheap reputation by compelling men to perform arduous duties for inadequate compensation. Three thousand dollars was low enough.
Mr. McFADlN. That was a speculation for the State, and it was yet expected to be recovered.
Mr. HARTMAN showed that the fees of the Auditor for Foreign Insurance Agencies brought into his office about $6,000 a year. Then if the Auditor is already receiving a large salary, it ought to be considered in making this allowance.
Mr. BRANHAM (Mr. Higgins in the chair) considered -that we ought to determine the duties of officers before we fix their compensation. He moved to recommit the bill to the Committee on the Sinking Fund, with instructions to so amend the bill as to give the control of the settlement of the sinking fun to the State Debt Sinking Fund Board, making the State Auditor, President of the Board. This was one of the most important bills of the session, and he was opposed to giving this matter into the hands of one man. He would have it placed in the hands of the State Debt Sinking Fund Board. This fund to the amount of $400,000, had been in the hands of the Commissioners enjoying the benefit of it, and at the same time receiving pay from the State for its managament. That was what thi bill also proposed in a modified shape. But he propsed to place it in the hands of a Board created for that purpose. He objected to the provision that this fund shall be left in the hands of the Auditor to invest it or not.
Mr. NEWCOMB said the Governor and Auditor were required to invest.
Mr. BRANHAM wished it incorporated into the bill. He deprecated the proposition to allow the State to go into the market to purchase her own paper at a discount. He advised an offset with the General Government of a debt of about a quarter of a million to save that interest. If the State would send out successful commissioners of immigration, let them give it out that they have no State debt and light taxation. He said that the whole managment of this fund had been inpalpable violation of law - and nobody to blame. It was time to take hold of this think in earnest.
Mr. NEWCOMB referred to the provisions of the bill with his amendment - to give into the hands of the State Auditor the powers of the late Commissioners of the Sinking Fund; that the incidental expenses of management be paid by the State, the Auditor taking and reporting vouchers; and the Auditor to receive $1,000 himself, and $2,000 for clerk hire. He defended the managment of the fund from the assaults of the gentleman from Jefferson [Mr. Branham]. It was now larger than ever. That gentleman now proposes to put this fund not the management of the Commissioners of the State Debt Sinking Fund - the Secretary, Auditor and Treasurer of State. He defended the existing law for funding. He went into a special account of the Sinking Fund from its foundation in the old State Bank of Indiana, to show that we have no right to take this fund - and give the income toward the payment of the State debt. There was no dishonor in the State taking these trust funds (which are not the State's money) and buying up the 21/2 and 5 per cent. bonds.
Mr. SHUEY explained the reasons for his amendment and the withdrawing of it page: 327[View Page 327] to-day. He was willing now to pay the State Auditor $1,500 for his own compensation and clerk hire. He would prefer to give all the State officers fixed salaries, without fees, like those of the Auditor on account of foreign insurance companies.
Mr. BRANHAM corrected a statement by Mr. Newcomb. The law was to pay the school fund, receipts into the treasury of the State - the State to issue six per cent bonds for the amount of the fund which the State uses. But now, as in the past, the fund has been a detriment instead of an advantage to the State.
Mr. HUGHES did not pretend to understand the general line of this debate. He confined himself to the compensation of the Auditor. He stated that $5,000 a year was taking care of this fund at less expense than it was ever taken care of before. But this sum of $5,000 had scared the House and the Committee. He did not think it right to impose the duty of taking care of one million of dollars for less than $5,000 a year. And he believed that this $5,000 a year was cheaper than the amendment of the Committee, and the gentleman from Marion (Mr. Newcomb). He wanted to get rid of these amendments and return to the Senate bill. And then he would put a penalty - making violation a felony, punishable with imprisonment.
Mr. LONG, of Jackson, said he was informed by good authority that this fund amounts to about four millions and a half. The management of this large, fund involved responsibilities and duties which should be compensated, and three or four thousand dollars was none too much. He understood that this fund had increased nearly three-quarters of a million in the last six years. There was a report on this fund made last year, which has never yet been printed. He gave the opinion that the system of dividing this fund - (the old law)- and county managment was the best.
Mr. MILLER could not see the advantage of recommitment.
Mr. BRANHAM suggested that the committee might determine the duty of each officer.
Mr. MILLER said the committee put the Auditor's compensation ($3,500) below all the advice they could get on the matter. He moved to lay the motion to recommit on the table.
Mr. BRANHAM and Mr. BOBO demanded the yeas and nays.
The motion was rejected - yeas 13, nays 10and the question recurred on Mr. Branham's proposition.
Mr. BOBO inquired whether it was not the effect of Mr, Branham's motion to loan this sinking fund to the State.
Mr. BRANHAM. That is the effect of the bill - the admendment does not change that.
Mr. BOBO. The school fund loaned to the State would be a school fund in imagination. Who shall call upon the State to pay this back again? And how? He confessed that he needed enlightenment in this matter. He certainly would prefer to divide out the fund to the counties.
Mr. CRAIN was opposed to the reference, because he understood that the author of the motion [Mr. Branham] was in favor of taking up the State bonds at par, while the other proposition allows them to be brought at the market value; and the effect of the passage of the gentleman's bill last winter increased the price of the bonds from 60 to 90 cents; and who received the benefit?
Mr. BRANHAM said that what he proposed was to place this management in the hands of the Commissioners of the State Debt Sinking Fund.
Mr. NEWCOMB. That is precisely where it stands now.
Mr. BRANHAM wanted this fund to go into the State Treasury, as a separate fund.
Mr. CRAIN saw the distinction between the propositions, as before stated - the bill proposes to purchase the bonds as their market value - the other at par. He was opposed, to recommitting the bill for the purpose of paying par.
Mr. BRANHAM asked if, by the act of 1845, we did not promise to pay these bonds as soon as twenty-five per cent, tax and a certain poll would pay it?
Mr. CRAIN said he took Governor Morton's conclusions on that question , that they were "payable at the pleasure of the State." It was a debt that has been long due, and not like an ordinary debt.
Mr. NEWCOMB stated the object of the act of 1865, abolishing the Board of Sinking Fund Commissioners - to invest this fund in the two and a half and five per cent, bonds of the State. This Senate bill has the same provision. The State gives nonoegotiable bonds for the value of the bonds purchased. The object of the gentleman from Jefferson [Mr. Branham] was to throw this sinking fund into the State Debt Sinking Fund, as a part of it; while the bill will give the State's bonds for the sinking fund. If this evinced dislike of the act of 1865, and was really an indication of the mind of the House, it might be ready for a proposition to repeal that part of the act of 1865, which abolishes the Board of Sinking Fund Commissioners, and appropriates this part of the fund; and appoint other commissioners for its management.
page: 328[View Page 328]Mr. LONG, of Jackson, proposed to amend the instructions of the committee, by directing them to report a bill dividing this fund among the several counties of the State.
Mr. BRANHAM demanded the previous question, and there was a second. Mr. B. then said again, that he proposed to place this money, as fast as collected, in the Treasury of the State, and that as fast as it is paid out, in shall be checked out in bonds. He would not leave it any more under the control that it has had for the last six years.
Mr. MILLER. Would not that increase the expense of management?
Mr. BRANHAM. It might.
Mr. NEWCOMB said the bill did not provide that this fund should be paid into the Treasury of the State - but that the Governor, Secretary and Auditor and Treasurer of State shall invest it in State bonds.
Mr. BRANHAM desired that this fund, as fast as it comes in, should be paid into the Treasury as a separate fund.
Mr. Long of Jackson's amendment was agreed to; and then, on the question of recommitment with Mr. Branham's instructions as amended, the vote stood - yeas 40, nays 45.
So the House refused to recommit with the instructions; and the question recurred on Mr. Newcomb's amendment, substituting new matter for the 3d section.
On the motion of Mr. CRAIN, Mr. Newcomb's amendment was laid on the table.
Mr. HUGHES demanded the previous question, and there was a second -
On motion of Mr. MONTGOMERY, this vote was reconsidered, and reversed.
Mr. BOBO moved to recommit the bill with instructions to report a bill by which this found may be distributed among the several counties in proportion to population, and loaned out at seven per cent, interest.
Mr. NEWCOMB said that in the single county of Randolph, the Treasurer of that county plundered that fund to a larger amount than the management of it has cost besides. It was a proposition to squander this magnificent fund.
Mr. McFADIN spoke in favor of county distribution. His county would take a share and pay the interest.
Mr. FOULKE said, during the session of 1865, to avoid the absurdity of the "State being a borrower and lender of the same fund at the same time, there was a law passed to invest this sinking fund in bonds of the State. Now this proposition was to return to that very system then repealed. This proposed system of loaning would require of the county borrower about 9 percent. That was moe than money is commonly worth. Was there wisdom or policy in doing and undoing things in this way?
Mr. O'NEIL supported the instructions proposed by Mr. Bobo. He showed the security which the borrowers of this fund gave for its use. At present, a portion of the school fund was still loaned out by the counties - the parties accomodated paying the expense. And in his county this money was all taken. The system was looked upon as a great accommodation; and he thought it would meet the approbation of the people generally.
Mr. HUGHES did not suppose at first, that this proposition would be seriously entertained. He called attention to the constitutional inviolability of the common school fund. It must never be diminished. What county had asked for this? None. And the result,would be, the fund would be frittered away and lost. It was simply a proposition to destroy the fund. It might seem to be popular on its face, but it would only give a little money for county officers to loan to their favorites. This was a supplemental bill to carry out the act of 1865, and we were taking a range that would uproot all that has been done for this fund.
Mr. WOODS said the fund was originally a fund of about $4,500,000, and that about $3,500,000 were already invested in State bonds under the act of 1865.
Mr. HUGHES closed by moving to lay Mr. Bobo's motion to recommit with instructions on the table.
The vote resulted yeas 53, nays 28: so the motion to recommit with instructions was laid on the table.
And then, on motion of Mr. MILLER, the bill was recommitted to the Committee on the Sinking Fund without instructions.
