The State's Secret School Fund Battle

What purport to be the statements of an unknown Seattle correspondent, published in the Tacoma Ledger, are manifestly compounded of ignorance and malice. It is therein charged that the present board of state land commissioners have refused to invest any school funds in bonds so that certain banks where the money was deposited might be favored. Under the law, the board may invest funds in national, state, county, or municipal bonds. The animus of the misrepresentation may be traceable to bond brokers who have hitherto succeeded in dealing as middlemen with the state. Shortly after the present land commission came into existence, a proposition from Tacoma brokers to purchase $180,000 of Snohomish County road and bridge bonds was presented. At that time, the financial crisis was at its height, and banks were failing in all directions. Three considerations actuated the board in rejecting the offer: first, that to purchase bonds then would imperil the solvency of several state banks; second, the offer was not satisfactory; and third, the board had decided to buy direct from the source of issue to save commissions for the taxpayers. The board had been privately informed that the sale of those bonds meant a $5,000 reward for the brokers. Since then, the board has purchased $35,000 of Everett school bonds at par, after obtaining a favorable supreme court decision, and these bonds are now a part of the school fund securities.