ORIGIN OF THE DIFFERENT FUNDS--CONGRESSIONAL FUND--COMMON SCHOOL FUND--ACCUMULATIONS, INVESTMENTS, DISPOSITION OF PROCEEDS OF VARIOUS FUNDS--AMOUNTS PAID FOR TUITION AND FOR BUILDING PURPOSES, APPARATUS, ETC

The various funds, of which the proceeds have been and are used for the maintenance and utilization of our present excellent school system, are the outgrowth of judicious forethought exercised by the legislative fathers of nearly a century ago, and of the subsequent direction of other sources of revenue into channels which ultimately concentrate the deposits of years, into a common fund for the promotion of educational interests. Shortly after the close of the Revolutionary struggle, when the people of the colonies were taking their first steps toward solving the problem of self-government, and the territory northwest of the Ohio River was beginning to assume prominence, the Congress of the Confederation, by ordinance dated May 20, 1785, in prescribing the mode for disposing of lands within those limits, inserted the following: "There shall be reserved the Lot No. 16 of every township, for the maintenance of public schools of every township, for the maintenance of public schools within the said township; also one-third part of all gold, silver, lead and copper mines, to be sold or otherwise disposed of as Congress shall here-after direct."

The purpose was further defined by the same authority, in Article 3 of the "ordinance for the government of the territory of the United States northwest of the River Ohio," dated July 13, 1787, as follows: "Religion, morality and knowledge, being necessary to good government and the happiness of mankind, schools, and the means of education shall forever be encouraged." These provisions extended to the entire territory, and were incorporated as a part of the organic law of the several States into which that vast area was afterward carved. Indiana was the second of the States so carved out, and the Congress of the United Staes, in the first of a series of propositons embodied in Section 6 of the Act to enable the people of the Indiana Territory to form a constitution and State government, and for the admission of each State into the Union, on equal footing with the original States, approved April 19, 1816, submitted the following to the convention of said Territory of Indiana, when formed forther free acceptance or rejection, which, if accepted by the covention, shall be obligatory upon the United States.

"First--That the section numbered sixteen, in every township, and when such section has been sold, granted or disposed of, other lands, equivalent thereto, and most contiguous to the same, shall be granted to the inhabitants of such township for the use of schools."

The people of Indiana territory, having met in general convention, pursuant to the aforesaid act, and framed a constituiton entitling them to admission into the Union on the same terms as original States, by ordinance dated June 29, 1816, for themselves and their posterity, agreed, determined, declared and ordained that they would and did thereby "accept the propositions of the Congress of the United States, as made and contained in their act of the 19th of April, 1816, that this ordinance and every part thereof, should forever be and remain irrevocable and inviolate, without the consent of the United States, in Congress assembled, first had and obtained for the alteration thereof or any part therof." In the Constitution so framed, Article IX, Sections 1 and 2, the provisions cited, and others, were guaranteed to the people of the State of Indiana, as follows:

"Section 1. Knowledge and learning general difused through a community, being essential to the preservation of a free government, and spreading the opportunities and advantages of education through the various parts of the country being highly conducive to this end, it shall be the duty of the General Assembly, to provide by law for the improvement of such lands, or from any other quarter to the accomplishment of the grand object for which they are or may be intended. But no lands granted for the use of schools or seminaries of learning, shall be sold by authority of this State, prior to the year 1820; and the moneys which may be raised out of the sale of any such lands, or otherwise obtained for the purposes aforesaid, shall be and remain a fund for the exclusive purpose of promoting the interest of literature and the sciences, and for the support of of seminaries and public schools. The General Assembly shall, from time to time, pass such lawas as shall be calculated to encourage intellectual, scientified and agricultural improvement, by allowing rewards and immunities for the promotion and improvement of arts, science, commerce, manufactures and natural history, and to countenance and encourage the principles of humanity, industry and morality."

"Sec. 2. It shall be the duty of the General Assembly, as soon as circumstances will permit, to provide by law for a general system of education, ascending in a regular graduationfrom township schools to State university, wherein tuition shall be gratis, and equally open to all."

Section 3 also provides that, "for the promotion of such salutary end, the money which shall be paid as an equivalent by persons exempt from military duty, except in times of war, shall be exclusively, and in equal proportion, applied to the support of county seminaries; also, all fines assessed for any breach of the penal laws, shall be applied to said seminaries, in the counties wherin they shall be assessed." Section 5, too, makes a further provision for the creation of a fund which has subsequently become and integral part of our present common-school fund. This provision prescribed that, at any time when the legislature should lay off a new county, "at least ten per centum [should] be reserved out of the proceeds of the sale of town lots in the seat of justice of such county, and at the same session, incorporate a library company, under such rules and regulation as [would] be reserved out of the proceeds of the sale of town lots in the seat of justice of such county, and at the same session, incorporate a library company, under such rules and regulation as [would] best secure its permanence and extend its benefits."

The first step taken by the Legislature toward the utilization of the 16th section in each Congressional township, was in an act passed at the first regular session, and approved December 14, 1816. Under the provisions of this act, superintendents of such sections, termed "school sections," in the several townships, were appointed with authority to lease such lands for a term of time not exceeding seven years, the lessee being required to set out, each year, twenty-five apple trees and twenty-five peach trees, until one hundred of each had been planted. By this means, these lands were kept in a condition which would command a better price when offered for sale, since the State had not the authority to sell the same prior to the year 1820, and appropriate the moneys arising therefrom to their legitimate purpose.

At the session of 1820-21, by an act approved January 9, 1821, the General Assembley appointed John Badollet, David Hart, William W. Martin, James Welch, Daniel I Caswell, Thomas C. Searle and John Todd, a committee to draft and report to the next Legislature a bill providing for a general system of education, with instructions to guard particularyly against "any distinction between the rich and the poor." The work of this committee resulted in the preparation and arrangement of the first general school-law in the State, which was entitled: "An Act incorporating Congressional Townships, and providing for Public Schools therein," and approved January 31, 1824. The first provision of that law required "that the inhabitants set up for twenty days, at three of the most public place in such townships, shall meet at the section reserved by Congress for the use of schools, or at some place convenient thereto;" and, should twenty of such inhabitants be present, they should elect three trustees, freeholders, which election being properly certified and filed in the Clerk's office of the proper county, such inhabitants wold become "a body corporate and politic, under the name and style of township school, No.--Range--," according to the number of such townships and ranges, subject to rules and regulations thereafter prescribed. By the provisions of Section 3, of that act, "the lands reserved by Congress for the use of schools, in each Congressional Towhship [should] be vested in the corporation thereof, and such corporation, through and by their said trustees [might], dispose of all such lands, gifts or donations, made or reserved for the use of township schools, in such manner as [might] seem most conducive to the best interests thereof; except that no sale of the fee simple of any such reserved lands [should] be made, nor any lease thereof be given or granted upon any other conditon than that of forfeiture by the lessee, upon his failing for one whole year to perform the conditions of such lease, or any part thereof."

The fifth section of said act provided, also, that the trustees aforesaid should, within one month of their election, divide their respective townships into such number of districts as would best accommodate the inhabitants therof, defining the same by boundaries. Upon the formation of the districts, it was also made the duty of the trustees to appoint for each of said districts three sub-trustees or directors, who should have charge of the immediate affairs of such districts and the schools therein. The duties of these sub-trustees, or directors, were, by the provision of Section 6, more particularly defined to be, to call a meeting of all inhabitants, free holders and householders, within ten days after their appointment, who should express by written ballots whether they would support a school in the district, and, if so for what length of time. An expression of the majority of such inhabitants being had in favor of supporting a school, it was next made the duty of such inhabitants to determine upon a suitable site for a schoolhouse, as near the center of the district as practicable. When such site had been so agreed upon and fixed, the directors were required to appoint a time for the inhabitants of the district " to meet and commence the building of a suitable schoolhouse for the accommodation of as many pupils as [would] probably attend such school; said house to be built of brick, stone, hewn timber or frame, according as a majority of such inhabitants [might] agree upon, the building and completion of which [being] superintended and conducted by such sub-trustees." In the construction of such schoolhouse, "every able-bodied male person of the age of twenty-one years and upward, being a freeholder or householder with the bounds of such district [was] liable equally to work one day in each week, until such building [should] be completed, or pay the sum of 37½ cents for every day he [might] be so fail to work." Such schoolhouses were required to be "eight feet between floors, and at least one foot from the surface of the ground to the first floor, and finished in a manner calculated to render comfortable the teacher and pupils; with a suitable number of seats, tables, lights, and every other thing necessary for the convenience of such school; which [should] be forever open for the education of all children within the district, without distinction."

The various minor funds of which our present magnificent common-school fund is composed, are divided, for the sake of distinction, into the productive, the contingent and the non-productive. The first class is composed of the following separate funds, to wit:

CONGRESSIONAL TOWNSHIP FUND.

This fund occupies the first position, because it was primarily the fund first set apart by the pioneer fathers for the exclusive use of succeeding generations as an efficient aid in forwarding the educational process of the future. It will be remembered, that, in in the act of Congress enabling the people of the Territory to construct a State, the ordinance provided that the proceeds of the 16th Section of every Congressional township should be dedicated to the purposes of education for the benefit of children residing within such township. This fund was therefore called the "Congressional Township Fund." At the date of the last report, in June, 1878, the aggregate of this fund was stated to be $2,453,106.73, and increase of $169.91 in one year.

THE SALINE FUND.

Another clause in the enabling act before refered to, provides that all salt springs in the Territory and the land reserved for the use of the same, should be granted to the State for the use of the people of the State on such terms as the Legislature should prescribe. The Legislature subsequently enacted that the proceeds of these reservation, likewise, should become a part of the school fund of the State. These lands sold for the aggregate sum of about $85,000, which has, since that time, been at interest, yielding a repectable portion of our annual income.

SURPLUS REVENUE FUND.

In June, 1836, by an act of Congress of that date, the surplus funds remaining in the treasury, after the payment of the National debt created during the Revolutionary war and the purchase of the Louisiana Territory, was distributed among the several States according to the ratio of their representation in Congress. The portion set apart to the State of Indiana, was $860,254. By act of the Legislature, approved February 6, 1837, $573,502.96 of this sum was set apart as a permanent branch of the public-school fund of the State. This money, according to the conditions of the distribution, is liable to be returned again into the National Treasury; yet, more than forty-four years have elapsed since the distribution, and no part of it has been or is likely to be called for by the General Government.

BANK-TAX FUND.

Section 15, of the charter granted to the State Bank of Indiana in 1834, provided that there should be deducted from the dividends and retained in the bank each year, the sum of 12½ cents on each share of stock, other than that held by the State, which should constitute part of the permanent fund to be devoted to the purpose of common-school education under the direction of the General Assembly, and suffered to remain in bank and accumulate until the Legislature should so appropriate it. The aggregate of the fund derived from that source amounted to the sum of about $80,000, which is now bearing interest and forms an important element of the permanent school fund of the State.

SINKING FUND.

The stock of the State Bank above referred to was in part owned by the State, and a part by individuals. To pay her subscription, the State borrowed the sum of $1,3000,000; to pay, also, by loans to them, the stock of individuals. The balance remaining after the appropriation to these purposes, together with the principal, interest and dividends of so much as was loaned to these individual stockholders, was appropriated to the creation of a sinking fund, to meet the contingent indebtedness of the bank; hence, the name of this branch of the permenent fund. When the charter of the bank had expired, which was at the end of twenty-five years, and all the liabilities of the bank were fully liquidated and canceled, the residue so remaining was transferred to the common-school fund of the State, and amounted in the aggregate to sum of $4,767,805.89. The sum of these several funds amounted ot $7,787,305.54. This is the total of the productive or interest-bearing fund, other than the amounts derived from sale of the county seminaries of the State, and all the propery, real and personal, belonging thereto, after deducting necessary expenses. The exact amount of this latter fund does not appear. Of the class of contingent funds, we have the following:

FINES.

In this class are included all fines for the violation of the penal laws of the State, assessed and collected in the process of litigation. The amount of money derived from this source is considerable, as shown by the returns of the proper officers.

FORFEITURES.

All recognizances of witness and of parties indicted for the commission of penal offenses against the State, which have been forfeited because of failure to appear and testify or answer, as ordered by the courts in whose jurisdiction the cases are prosecuted, are collectible by law, and when so collected are made a part of the common-school fund of the State, and reported by the Commissioners of the proper county. The amounts so returned, make the aggregate sum of from $30,000 to $48,000 annually.

ESCHEATS.

It is provided in the eleventh section of the law of descents, that "The estate of a person, dying intestate, without kindred capable fo inheriting, shall escheat to the State, and shall be applied to the support of Common schools, in the manner provided by law." There is now in the treasury of the State, about $20,000 liable to be appropriated to the purpose contemplated by law, whenever the period limiting its retention in the treasury shall have expired.

SWAMP-LAND FUND.

Our present State Constitution [Article VIII, Section 2] provides that, "All lands which have been, or may hereafter be granted to the State, when no special purpose is expressed in the grant, and the proceeds of the sales of the swamp-lands, granted to the State of Indiana by the act of Congress of the 28th of September, 1850, after deducting the expenses of selecting and draining the same," shall become a part of the common-school fund. In this grant, no purpose was expressed touching the subsequent appropriation or application of these funds, and the State was at liberty to make such disposition of the same as might be deemed proper. Accordingly, these lands were ordered to be sold, and, after paying the expenses incidental thereto, the residue of the proceeds was converted into a fund for the maintenance of common schools.

TAXES ON CORPORATIONS.

Another source of revenue designed to be merged into the common-school fund, is that defined by the Constitution as "Taxes on the property of corporations," may be assessed by the Legislature for common-school purposes. This source is said to be uncertain, since the purpose of the framers of that instrument is not well defined. However, in 1847, a charter was granted for the construction of a railroad from Indianapolis to Terre Haute. A clause contained in that charter is to this effect: "When the aggregate amount of dividends declared shall amount to the full sum invested, and 10 percent per annum thereon, the Legislature may so regulate the tolls and freights that not more than 15 per centum per annum shall be divided on the capital employed, and the surplus profits, if any, after paying the expenses and receiving such proportion as may be necessary for future contingencies, shall be paid over to the Treasurer of the State for the use of common schools." [Local Laws, 1847, Sec 23, pp. 77-84] This would seem to define with some degree of certainty, the conditions precedent to the appropriation of that class of funds to the purpose intended. The sum likely to be derived from this source, as soon as the necessary provision is made for it accumulation, will not be less that $1,000,000. In addition to those already enumerated, there is another source denominated

UNPRODUCTIVE,

from which a very considerable sum may be eventually realized in the shape of rents and profits, and proceeds of the sales of the remaining sixteenth sections yet undisposed of, the estimated value of which is about $95,000.

The different funds, being the separate sources of accumulation which combine to constitute the common-school fund of Indiana, as given above, are denominated as "a perpetual fund which may be increased but never diminished," because the proceeds only are liable to be used for the maintenance of the public schools of the State. The capital fund thus far accumulated, as shown by the report of the Superintendent of Public Instruction, for 1878, amounts to $8,974,455.55, an increase of $47,885.21 over the preceding year. Of this fund, $2,616,565.61 was held by counties, $3,904,783.21 consisted of non-negotiable bonds, together making the common-school fund $6,521,348.82. This latter sum, being added to the Congressional township fund, gives the grand total as above. A like ratio of increase since 1878, would make a little less than nine and one-half millions as the capital stock of our common-school fund at this date. The capital of 1878 produced an allowance for distribution among the several counties of the State, as applicable to school purposes for the year ending June 30, 1878, in the sum of $2,967,539.12. (Pages 53-55)