INTEREST ON SCHOOL FUNDS.
Mr. Youche's bill [S. 28] to regulate the interest upon school and other trust funds [after May 10, 1883, to be 6 per cent.] was read the second time, with a Committee report recommending that it lie on the table.
Mr. FOULKE insisted there should be some such bill enacted, as in his County there is some $60,000 lying idle because it can not be loaned at 8 per cent.
Mr. JOHNSON: The Superintendent of Public Instruction, has statements to show that from 94 to 96 per cent. of the school fund is being loaned, and has been for the past four years, at 8 per cent., readily, and therefore the Committee was not willing to recommend a reduction of the interest.
Mr. VOYLES moved that the bill be recommitted to a Special Committee of Three, with instruction to loan the school fund at 6 per cent There is no reason why school fund interest should be placed, higher than the legal rate of interest in the State. And there are other reasons why school moneys should be loaned as low as other moneys. Whether the money is loaned out or not the County has to account to the State for the interest on the school fund. Farmers can not page: 88[View Page 88] pay 8 per cent. for any considerable length of time. So the best class of borrowers do not seek the school funds, but go elsewhere and obtain money cheaper.
Mr. FOULKE moved to amend so that the bill may be referred without instructions. There is & good deal of reason In the remarks of the Chairman of the Committee on Education [Mr. Johnson. ] Something might be done by redistribution of the school fund so that Counties that can loan at 8 percent, can have more money apportioned to them.
Mr. VOYLES accepted the amendment.
Mr. HENRY opposed the motion. He has a communication from the Auditor of his County saying the fund of $54,000 in that County can be loaned at 8 per cent. readily, and this is the experience in nearly all the Counties in the State. Where the money is not loaned it must be the fault of the officers. In his County the records having been burned the County officers can not certify there are no outstanding judgments against applicants and consequently they have to procure extra personal security.
Mr. MAGEE looked at this as a practical business question, and insisted that the Legislature should not interfere with the present law. In his County the best class of borrowers take all the school money as fast as it is ready to be loaned. The passage of this bill would reduce the revenue from interest about $260,000, and consequently he spoke in opposition to it.
Mr. BROWN insisted the rate of interest on this fund should be uniform all over thus State, and that 6 per cent. is high enough. A man must have a remarkable business to justify paying more than 6 per cent. In his County a great deal of this money is loaned on securities that are not good, and one reason why the rate should be reduced is the solvent, debt-paying farmers will not borrow from the school fund while they can obtain it cheaper elsewhere. Safety to the fund ana justice to the people demand that the rate of interest shall be brought down.
Mr, VAN VORHIS said if 94 to 96 per cent. of this fund can be loaned at, 8 per cent. he opposed anything looking to a reduction of the interest on this fund.
Mr. FOULKE did not think a proper determination would be arrived at without finding, out the exact status of the fund ia the various Counties of the State. He would not favor reducing the rate of interest to 6 per cent. if more can be realized. He supposed the greater part ia loaned on good security. If necessary, the school fund should be reapportioned.
Mr. VOYLES-insisted the rate is too high for borrowers in the Southern part of the State. If the rate was reduced men would not go to the banks for money when obtainable from the school fund. Men who pay the money back will go for money where it can be had the cheapest. Loan agents want to deal with men who will pay not only the money back, but the money with interest, and such agents desire to see the interest on the school funds kept up at a high rate.
Mr. VAN VORHIS: If the income from the school fund is reduced the number of days of schooling must necessarily be reduced, unless teachers be hired at a less salary.
Mr. HENRY could not see why the school fund Interest should be reduced to 6 per cent. when private parties can loan at 8 per cent. It would be a very foolish and unwise movement to reduce the rate of interest on the school fund at this time.
Mr. WHITE opposed the move to reduce the rate of interest. We ought to be very careful About this Common School interest-one of the most important in the State.
Mr. JOHNSON said: Within a short time letters have been addressed to the Auditors of the ninety-two Counties of the State, seventy-four of which have replied, and out of seventy-four forty County Auditors respond that they can loan the school fund at 8 per cent., nine for 7, and the balance recommend a reduction to 6 per cent. So it is clear that any reduction of the rate of interest would be considered a blow at free schools. Only about 4 1/2 per cent. of the entire fund is not loaned out. These figures were obtained recently through correspondence by the Superintendent of Public Instruction. Before consenting to any reduction the Senate should carefully consider the matter.
On motion by Mr. WILLARD the motion to refer was laid on the table by yeas, 23; nays, 13.
And then the Senate adjourned.
