USA > Indiana > A history of education in Indiana > Part 17
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+ October 2, 1837.
į To January 1, 1839.
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 195
their original appropriation-$573,502.96-while the State Bank got $286,751.48 only.
This, considering the distressing financial condition of the State, was an act of far-seeing generosity. Nearly $6,000,000 had already been spent upon the great system of internal improvements, whose completion seemed likely to require more than twice as much more. The public debt was $18,000,000. It might have been expected that the State would apply the Federal deposit to easing the burdens of taxation. In ten States the money was so applied to general purposes. Eight States gave the whole of it to education: four of these were in the South, two in New England, and two-New York and Ohio-of the middle West. Eight States, including Indiana, gave a part of it to education.
Table showing the Distribution of Surplus Revenue.
STATES.
Elect- ors.
Revenue deposit.
Applied to.
1. Alabama
7
$669,086 78
Education.
2. Arkansas
3
286,751 48
General purposes.
3. Connecticut
8
764,670 61
Education, one half.
4. Delaware.
3
286,751 48
Education.
5. Georgia
11
1,050,422 09
Education, one third.
6. Illinois.
5
477,919 13
Education, in part.
7. Indiana
9
860,254 44
Education, one half.
8. Kentucky
15
1,443,757 40
Education.
9. Louisiana
5
477,919 13
General purposes.
10. Maine.
10
955,838 27
General purposes.
11. Massachusetts
14
1,338,173 57
General purposes.
12. Maryland
10
955,838 27
Education, in part.
13. Mississippi
4
382,335 31
General purposes.
14. Missouri
4
382,335 31
Education.
15. Michigan.
3
286,751 48
Internal improvements.
16. New Hampshire
7
669,086 78
General purposes.
17. New Jersey
8
764,670 61
General purposes. Education.
20. Ohio.
21
2,007,260 36
Education.
22. Rhode Island.
4
Education.
23. South Carolina
11
1,051,422 09 Education, one third.
24. Tennessee.
15
1,438,757 40
General purposes.
25. Vermont.
7
669,086 78
Education.
26. Virginia
23
2,198,428 04
General purposes.
18. New York.
42
4,014,520 71
19. North Carolina.
15
1,433,757 40
Education, in part.
21. Pennsylvania.
30
2,867,514 80 383,335 31
Education, in part.
196
UNDER THE NEW CONSTITUTION, 1851-'91.
The preceding table is taken from the New York Historical Records, 1885, page 91, showing the distribution by States. Of the total deposit, about fourteen millions went for educa- tion-or one half of it.
By the same act of February 6, 1837, it was ordered that this $573,502.96 should be distributed to the counties of the State in proportion to the taxable polls for the year 1836, the interest to be used for the support of public schools. The loan was limited to five years, but was, in 1842, extended another five years. In the Revised Statutes of 1843 this fund (ignoring that which was invested in bank stock) was designated as the Surplus Revenue Fund, for the preserva- tion of which the several counties should be held liable; and · for the payment of the annual interest thereon at the rate established by law, devoted to the support of public schools in such counties .*
By section 2, Article VIII, of the new Constitution, the Surplus Revenue Fund was made a part of the Common School Fund, and so has been no longer separately reported.
7. Delinquent Tax Funds.
The following paragraph is inserted because of its histori- cal significance and relation to the beginnings and legal constitution of the school moneys, rather than for any real addition to the permanent State endowment.
The Congressional Township, Saline, and Seminary Funds all originated in or were confirmed by the Constitu- tion of 1816, and so antedated the Delinquent Tax Fund (1832). But the first has never been made or considered a
* For the distribution of the surplus revenue to counties, 1837, see Superintendent's Report, 1872, Part II, p. 169. Three counties-De Kalb, Lake, and Wells-never claimed their shares of this fund ($2,125.60 each), so that the amount actually distributed to the counties was but $567,126.16. The counties of Benton, Blackford, Howard, Jasper, Newton, Ohio, Pulaski, Starke, Tipton, and Whitley were formed later. The deficiencies in these counties were made up in 1854 by a distribution of certain balances of Saline and Bank Tax Funds.
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 197
part of any permanent State fund; the second was not so appropriated until 1833, and the last in 1851.
So that it is historically true that the statutory origin of our present magnificent School Fund was in the Legislature of 1831-'32 taking form as "An Act to provide a fund to encourage Common Schools."* It was prescribed that upon lands, whether of non-residents or others, whose taxes were delinquent for three years, the School Commissioners should charge up a penalty of 50 per cent on the taxes, and at the rate of 100 per cent per annum on said tax until the same shall be paid; specifying that "the said tax, penalty, and percentage shall be a lien on the land until paid to the School Commissioner; the same to be loaned out in the same man- ner as the moneys arising from the sale of school sections. And the interest on such loans shall be faithfully and equally applied for the use of the common schools in the manner hereafter directed by the Legislature."
After three years, further, it was provided that "the land might be sold for the purpose of augmenting said Common School Fund." Two years later (February 7, 1835) the Legis- lature enacted that "moneys raised by this act, or the act to provide a fund to encourage common schools, shall, by the School Commissioner of each county, or other officer acting in his stead, from time to time as the moneys may come into his hands, be paid to the order of the township trustees in the same manner as the township money is now disbursed." In 1839, Mr. Kinney, as chairman of the Com- mittee on Education, in a masterly report to the House of Representatives, estimated that the proceeds of the land-tax sales for the State amounted to not less than $10,000 annual- ly ; but complained, and justly it seems, that, contrary to the express provisions of the law, the principal was being used. In the Revised Statutes of 1843 delinquent taxes are other- wise disposed of, and do not elsewhere receive mention.
During its existence the law was one whose operation
* Approved February 2, 1832.
14
198
UNDER THE NEW CONSTITUTION, 1851-'91.
affected alien land owners most; perhaps it was meant to do so chiefly. From fifty to seventy-five thousand dollars, per- haps, were derived from this source, and, except for the ex- pense of handling, went, as other school revenue, for the current support of the township schools. No record appears of any additions made to the permanent fund.
By an act of the Legislature, approved March 3, 1853, county treasurers were authorized "to sell lands returned delinquent for seven years, and apply the proceeds to the Common School Fund of the State."
8. The Swamp Land Fund.
In order to understand the Swamp Land donation, it is necessary to take a survey, briefly, of the history of the en- terprise before it touched Indiana.
Ten years prior to the grant Arkansas and Missouri had asked through Congress the means for, or the privilege of, draining and so reclaiming certain swamp and waste lands lying along their boundaries. In 1847 the Commissioner of the General Land Office recommended that "such swamp and other lands as are from local causes unfit for settlement and cultivation in their present condition " be granted by
" Congress to the States in which they lie, "in order that such portions of them as may be reclaimed may be made product- ive and available to such States for purposes of education, internal improvement, and such other public uses as those States may deem best calculated to advance their own pecul- iar interests."* It will be seen that here is a suggestion of educational uses of the proceeds of these swamp lands, though associated with others. The year following a bill was reported to Congress, but, failing of passage, it was re- placed (1849) by another, whose benefits and provisions were, by the committee, extended not to Arkansas alone, but
* For a full presentation of the question of Land Grants, and especially of the Swamp Land Grant, see Knight's History and Management of Land Grants for Education in the Northwest Territory.
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 199
"to each of the other States of the Union in which such swamp and overflowed lands may be situated," in which form it was approved September 28, 1850.
The article required a survey, description, certified lists, and plats of the lands, the issue of the patents therefor, and the fee simple of such lands to be vested in the States, sub- ject to the disposal of the respective Legislatures.
No mention was made of the objects of the grant except that "the proceeds of said lands, whether from sale or by direct appropriation in kind, shall be applied exclusively, as far as necessary, to the purpose of reclaiming said lands " by means of the necessary levees and drains. "The possibility of surplus revenue accruing to the State," however, says Mr. Knight,* "was known to the committee who reported the bill to Congress in 1850. In their report they quoted with approval the suggestion of the Land Commissioner regard- ing the use which the States might make of the proceeds of the lands."
The total amount of lands patented to the several States aggregated 48,802,271 acres. Of the States of the Northwest Territory, Indiana and Wisconsin, by Constitutional pro- vision, dedicated the surplus proceeds to education ; and Ohio, Michigan, and Illinois, by statutory enactment, within ten years. Prior to 1880 the lands conveyed were as follows: Ohio, 25,640 acres; Indiana, 1,257,588 acres; Illinois, 1,454,- 283 acres; Michigan, 5,659,217 acres; Wisconsin, 3,071,459 acres. In 1851 the Governor estimated Indiana's grant at a million and a quarter of acres. Up to June, 1853, there had been patented in the six land districts of the State 1,210,630 acres. By the State Department of Public Instruction it was finally reported as 981,682 acres. Much of it is not even yet reclaimed.
The money returns from the lands are more uncertain than the surveys and maps. The Educational Committee in the Constitutional Convention placed the probable surplus
* See Knight's Land Grants, p. 22, and note.
200
UNDER THIE NEW CONSTITUTION, 1851-'91.
to be turned into the School Fund at half a million dollars. Governor Wright, quoted above, anticipated an increase of the School Fund from this source of not less than a million dollars. Hon. J. P. Drake, Treasurer of the State, and ex- officio Superintendent of Common Schools at the time of the grant, estimated their probable value to the schools at $700,- 000. Greatly as these estimates differed, they were all far from correct. The sequel came soon. The auditor's reports, after 1853, do not mention the swamp lands as even a possi- ble source of income. The proceeds were absorbed in the effort and pretense of draining them. In 1865 Hon. George W. Hoss, Superintendent of Public Instruction, bemoaned the fact that while most of the lands had then been sold, "nothing from their source had been added to the fund." "It is, however, believed," he continues, "by good men that much might have been added thus if the Swamp Land Com- missioners had cared less for themselves and more for edu- cation-briefly and plainly, if they had all been honest." Indeed, it is greatly to be regretted that nothing has been realized from so promising a grant. Ohio and Indiana only of this group of States have lost the whole of it. Michigan reports not less than $400,000; Illinois, $1,000,000; and Wis- consin, $1,147,071-all devoted to education. At the rate of proceeds in Illinois, Indiana should have had $850,000 from these lands.
At one time-about 1870-$42,000 of this fund was reported as lying in the State treasury, but after 1872 it no longer appears in the reports. Even this was used, perhaps, upon the land. The schools have none of it.
The most hopeful view, perhaps, that may be taken of the entire transaction is fairly presented in the reflections of Superintendent Mills in the fourth annual report of the department, 1855. Even then, but five years after the dona- tion had been so generously made, the indications were that "the heir of this noble bequest would find among its assets, after the debts were paid, little else than the good-will of the testator and the kind wishes of his executors."
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 201
It was not uncommon for Prof. Mills to see better things for the State than a large endowment of education even. At one time, commenting upon the Congressional Township Fund, he was led to say that if the entire sixteenth section fund could be exchanged for an all-pervading and liberal sentiment toward learning, the State would be the better for it. So in this instance he was constrained to add: "Though the Swamp Land Fund will be completely exhausted in rendering these lands fit for agricultural purposes, yet its conversion into material ditches will not be without a fa- vorable connection with the educational interests of the State. Thousands of acres will thus be redeemed from the dominion of frogs and fever miasma and converted into fields loaded with the rich fruits of the earth, or clothed with flocks and herds more numerous than ever graced the in- closures of the man of Uz. The revenue ultimately arising from the agricultural improvements of these lands will doubtless prove more extensively and permanently useful to the cause of popular education than the entire proceeds of their sale would have effected had they all been added to the School Fund. Though this fund of magnificent dimen- sions has been literally drained, yet its underdrains will im- part increased fertility to the educational manor, whose pro- ceeds will be an ample equivalent for all disappointed hopes in that direction."
The State has yet some thousands of acres to be drained and reclaimed; but whether the School Fund will profit thereby remains to be seen.
9. Contingent Funds.
Aside from the determinable contributions to the perma- nent school funds already noted-the Congressional Town- ship, Saline, County Seminary, Delinquent Tax, Bank Tax, Surplus Revenue, Swamp Land, and Sinking Funds-the State fund has at various times, and in unequal and an- nually varying amounts, received additions from other and incidental, though sometimes even more productive, sources.
202
UNDER THE NEW CONSTITUTION, 1851-'91.
The moneys referred to are generally the outcome of statutory provision, though occasionally given permanence by constitutional requirements, and are exceedingly varia- ble. They are grouped together under the head of "Contin- gent Funds," and include (1) escheated estates, (2) the pro- ceeds of estray sales, (3) certain taxes assessed upon corpora- tions, (4) fines assessed for breaches of the penal laws of the State, (5) forfeitures, and (6) the net proceeds of sales of the Michigan road lands.
Upon a final summary it will be found that little has been added to the permanent fund from any of these sources or all combined; but they show clearly a wholesome and saving tendency to regard the encouragement of public ele- mentary education as deserving of every consideration. If these have added little, their planning has been part of a movement which has added much. They illustrate well the general policy.
(1) ESCHEATED ESTATES.
Prior to the middle of the century there had already ac- cumulated in the State treasury about $2,500 of estates without known heirs.
In the Revised Statutes of 1843 it was provided * that "if any person dying intestate shall leave no heirs or kindred entitled to the inheritance . . . his estate shall escheat to the State of Indiana, to be applied exclusively to the support of common schools of the several townships of the county or counties in which such may be situated, in such manner as may be directed by law." A similar provision appears in section 367, chapter xxx, of the same laws. But no mention is there or elsewhere made of any legislative direction as to. the use of the moneys. Either there were no moneys or their statutory disposition was neglected. The revised Con- stitution also specifies as a part of the Common School Fund "all lands and other estates which shall escheat to the State for want of heirs or kindred entitled to the inheritance"-a
* Section 125, chap. xxviii, p. 438.
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 203
provision which was reaffirmed by the law of 1852 in as many words.
Seeing that, being paid into the State treasury, no profits were derived from these moneys, Superintendent Rugg * rec- ommended that they be paid into the county treasury and there added to the Common School Fund, invested as such, and the proceeds used in the county where collected.
By November, 1865, the accumulations amounted to $5,888.03, and three years later to $16,702.42. Superintendent Hobbs (1868) urged that, while no records existed to indicate whether this money had really escheated, and the whole de- posit might be only an illusion, " it be put into active service for the benefit of public schools until it can find legal claim- ants," and that a date be specified "after which claims shall not be allowed, that it may properly escheat to the State."
Milton B. Hopkins also (1872) found more than $17,000 unclaimed estates lying in the treasury, and asked for some law defining the period of escheat. But nothing was done, and nothing has since been done. In neither instance was the recommendation even considered. While nominally, then, for fifty years a source of revenue to the schools, es- cheated estates have not added a dollar to the fund or rev- enue.
(2) ESTRAYS.
Under the earlier law, money realized from the sale of estrays was turned into the county treasury. But by act of January 15, 1844, such accumulations were transferred to the Common School Fund of the county, and required to be apportioned among the several school districts. This, however, was held and distributed as revenue, and was in no sense an endowment.
In the Revised Statutes t it is provided further concern- ing animals adrift, that after their sale, according to the terms of the statute, the net proceeds, after expenses, "shall
* Eighth Annual Report, 1859, p. 11.
៛ 1852, chap. iv, scc. 7, p. 103. See also School Law, 1885, p. 11.
204
UNDER THE NEW CONSTITUTION, 1851-'91.
be paid over to the county treasurer, ... for the use of com- mon schools, and shall belong to and become a part of the State Common School Fund, and shall be paid over to the Treasurer of State by the treasurer receiving the same for that purpose." The period for reclaiming by the owner was fixed at one year.
Up to 1859 Superintendent Rugg reported that nothing had been added to the fund so as to produce any revenue. Since then, for thirty years, it has received no separate men- tion by the department, and has really made but insignifi- cant contributions to the fund. In general, the legal ex- penses involved in the impounding and sales consume the proceeds. In the ten years from 1881 to 1890, inclusive, the total estray fund amounts to about $750. Though accurate statistics can not be had, it is safe to say that the aggregate additions made from this source are something less than a thousand dollars.
(3) CORPORATION TAXES.
In the now historical "Act to increase and extend the benefits of common schools" of 1849 was taken the first step in a really serious effort to secure general schooling. For the furnishing of means it included, besides a State tax of ten cents on each hundred dollars of property and a twenty- five-cent poll tax, "a tax " also " of three dollars on each one hundred dollars. . . on the amount of all premiums received in this State for insurance on property or lives within the same by agents of insurance companies not chartered therein.". Section 2 specified that "these taxes (except that upon insur- ance premiums) should, together with the Surplus Revenue Fund, the Saline, and Bank Tax Fund, be ... set apart for the support of schools within the respective counties of the State, and be denominated the County Common School Fund."
On the contrary, it was specified that the insurance tax should, through the Treasurer of the State, be apportioned among the several counties of the State according to the number of polls therein, the Treasurer paying over to the
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 205
several county treasurers "their respective proportions of said fund, which shall be added to and become a part of the County Common School Fund."
It is not at all clear that this tax upon the business of foreign insurance companies was meant to be held in trust as a permanent fund, though the wording of the law and its association with the other invested funds suggest it. If there were such taxes, however, devoted to education, they went as revenue, not into the investments. Nevertheless, it gave a kind of excuse for the action of the convention, and of the next following Legislature, in including taxes upon corpo- rations as a possible source of revenue for the schools. In the Constitution the last-mentioned constituent element of the permanent Common School Fund comprises "taxes upon the property of corporations that may be assessed by the General Assembly for common-school purposes." The provision was made a part of the statutory law of the schools the year following, and gave early promise of returns. The promise seems not to have had even the beginning of ful- fillment. If there were such proceeds, they have not been made matters of record. Superintendent Rugg, indeed, in 1859 found that they had "never been separated from other school taxes and added to the Common School Fund; but they had gone to the account of revenue, and as such been expended," implying the existence of such moneys, but charging their diversion to the annual revenue.
In the year 1847, consequently under the old Constitu- tion, a charter was granted for the building of a railroad be- tween Indianapolis and Terre Haute, now the Vandalia Line. Among the provisions of the act of incorporation was one to the effect that "when the aggregate amount of dividends declared shall amount to the full sum invested, and ten percentum per annum thereon, the Legislature may so regulate the tolls and freights that not more than fifteen per cent per annum shall be divided on the capital em- ployed, and the surplus profits, if any, after paying the ex- penses and receiving such proportion as may be necessary
206
UNDER THE NEW CONSTITUTION, 1851-'91.
for future contingencies, shall be paid over to the Treasurer of State for the use of common schools." *
At least three legislatures prior to 1870 had sought to re- cover for the School Fund a supposed surplus due the State from this corporation, but without avail. Attorney-General Williamson, who brought suit in the name of the State in 1865, held that no action could be maintained without fur- ther legislation. In 1870 proceedings were instituted in the Putnam Circuit Court by the local prosecutor, assisted by Judge Claypool and W. R. Harrison, for the recovery of $600,000. The case was venued, and has since been known as the "Owen County case." Five years later, after a tedious but sometimes exciting trial, the question went to the jury, who stood eleven for the State, but, before any decision was reached, the case was dismissed by the judge. This sud- den and strange termination encouraged the public belief in the strength of the case.
In the mean time, at the special session of the Legislature (1872), the Committee on Railroads was ordered to investi- gate the matter. After some consideration, the amount probably due was put, by the chairman, at from one to two millions of dollars. The matter was not brought to action, however, and dropped out of notice.
Under Attorney-General Buskirk the case was again brought to trial in Marion County (1875), but in the Supreme Court was dismissed on a technicality. The most recent official attention given the case was in the Legislature of 1889, when an investigation was ordered upon a joint reso- lution of both houses, but, because of some supposed irregu- larity, no inquiry was had.+
* Local Laws of Indiana, 1847, sec. 23, pp. 77-84.
t An interesting and detailed review of the case and its history ap- peared in the Indianapolis Sentinel, Monday, February 2, 1891. No other instance has been found of an attempt to increase the permanent fund by a tax upon corporations. Of the merits of this case it is not in place here to speak. It only concerns the present discussion to note the fact, and its relation to the movement for such fund in the State.
ORIGIN AND HISTORY OF THE COMMON SCHOOL FUND. 207
(4) FINES AND FORFEITURES.
Under the "Seminary Law of 1818," which was still in operation in 1843,* "fines assessed for any breach of the penal laws " were to be paid into the treasury of the county, and applied to the public seminaries of that county. By a special act in the latter year,t entitled an " Act to assist and make common schools more effective," it was provided that "money collected on every forfeiture on a recognizance shall be regarded and held as belonging to, and a part of, the Common School Fund of the county within which such recognizance is or shall be taken and forfeited." That "such money shall be paid over to, and managed by, the same au- thority as is now or may be intrusted with the receiving and managing of the Common School Fund of the proper county, and such money shall be managed in the same manner as other common - school funds are or may be managed by law."
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