The Act also provided (Sec. 4) that:

"All moneys derived from the sale of said land and Land Scrip should be invested in safe stocks of the United States or of the States, or some other safe stocks yielding not less than five per centum upon the par value of said stocks. "

Also (Sec. 3):

"That all expenses incurred in the management and disbursement of the moneys which may be received therefrom shall be paid by the States to which they may belong out of the treasury of said State. "

The New York Court of Appeals has decided in the case referred to in the foregoing circular (The People ex Rel. Cornell University v. Davenport, 28 New York State Reporter, 796) that premiums necessarily paid in investing funds in the prescribed class of securities must be paid by the State, and not out of the fund itself or its income.

At the time the various States accepted this grant and assumed these burdens, it was not difficult to find "safe stocks yielding not less than five per centum upon their par value," without paying any premium therefor. Such "safe stocks" can still be obtained, but at a very large expense for premiums. Assuming that such stock can be purchased, these provisions amount to a practical guaranty of a per

manent income of at least five per centum upon this fund in every State in the Union.

See also Matter of McGraw, 111 N. Y. pps. 114 115, 129.

In view of these obligations, it becomes a matter of practical importance to note how each State. has invested this fund.

Many of the States have already turned these funds into their respective treasuries, and have issued to their respective beneficiaries their obligations in various forms, in which they agree to pay a fixed rate of interest varying in amount, but never less than five per cent. on the principal of the fund.

Such has been the treatment of this fund, and the rate of interest paid in the following states, namely:

Missouri and Wisconsin (in part) invested these funds in "Certificates of Indebtedness," issued by the State, in which, in Missouri, five per cent. is reg

ularly paid, and in Wisconsin, six per cent. Michigan also used this fund, and the evidence of the State's indebtedness consists simply in an open book account on which the State pays six per cent. Georgia, it appears, treated this fund in the same way and also pays seven per cent. Maine adopted this plan of investment as late as June 1st, 1889, and the other States at varying earlier dates. All these were in fact investments in "State Stocks" as provided for in the Congressional Act.

The States thus investing the fund save themselves from the expenses and burdens of management and also from any responsibilities or liability to restore any portion of the principal or interest which may be lost in consequence of unfortunate or unwise investments or by any other "action or contingency."

Alabama, Tennessee, Mississippi, Virginia, Kentucky, Florida, Nevada (in part), Maryland (in part), New Jersey and Delaware have accomplished practically the same result by investing this fund in their own state bonds. Whether these bonds had been previously issued for other purposes, or were issued especially for this purpose does not always clearly appear. In either event it is evident that when these State bonds mature there is nothing left for the States to do but to issue new bonds or to treat the principal in some other way as a direct State liability on which interest annually will be paid to the beneficiary. It is plain that this is the most practical way of managing this fund and one which all the States will probably sooner or later adopt. The remaining States invested this fund in what they at least regarded as "other safe stocks."

The Congressional Act has been amended so as to permit the State of Iowa to invest this fund in bonds secured by mortgages on unincumbered real estate. No other State has the right to indulge in such investments. But it will appear that in Connecticut and California and a few other States a portion of this funds is thus invested. For a short time that practice prevailed in the State of New York, but under the advice of the Attorney-General the bonds and mortgages were collected and the practice abandoned.

In no State has the actual income fallen below five per cent. except in Nevada and New York.

In Nevada the state invested a large portion. of this fund in government four per cent. bonds, but the state paid all the expenses of management, including premiums, and made up the "diminution" below five per cent. by making other large appropriations to the beneficiary out of its general funds.

In the state of New York the investments have recently been made largely in government bonds bearing a rate of interest less than five per cent.. These investments were made in spite of the fact that "other safe stocks" bearing a rate of interest of at least five per cent. could be obtained. The actual income of the University was also diminished by the state taking all expenses for premiums out of the income.

The right of the state to invest in securities bearing a rate of interest less than five per cent. when "safe stocks" could be obtained bearing a rate of interest of at least five per cent. has not yet been presented to the courts of this state.

But the practice of taking the expenses of management of the fund, such as premiums, commissions &c., from its income, has been condemned by the New York Court of Appeals in the recent decision already referred to. This practice seems to have prevailed only in the State of New York.

In the State of Wisconsin, as a matter of bookkeeping, these expenses seem to have been charged against the income, but it was a matter of no importance to the beneficiary, since that state appropriated to the beneficiary each year out of its general funds, in addition to this income, a sum much larger than these expenses.

It will also appear from an examination of these communications that Massachusetts is the only state in the Union where the income of the fund has been divided or given to different institutions. To fritter away a fund of this kind by dividing its income. would seem to be unwise. At least such seems to have been the practical conclusion arrived at in each of all the other states.

In 1865 a strong effort was made to divide this fund in the state of New York among various institutions, each one asking for a portion thereof. through the exertions of the Hon. Andrew D. White, then a senator and afterwards President of the Uni

But,

versity, the scheme failed. Mr. White was very effectively aided in his efforts in this direction by a fellow senator, the Hon. Ezra Cornell, who announced that, if the State of New York would give the whole income to a single institution to be located at Ithaca, N. Y., he would supplement its endowment by a half a million of dollars out of his own private fortune.