OFFICE OF TREASURER OF STATE,

TOPEKA, KANSAS, July 1, 1878.

To His Excellency GEO. T. ANTHONY, Governor of Kansas: SIR: In compliance with section 1 of chapter 180, Session Laws of 1877, I have the honor herewith to submit the first biennial report of the transactions of this office, covering the period from December 1, 1876, to June 30, 1878, inclusive.

Very respectfully,

JOHN FRANCIS,
State Treasurer.

The financial condition of Kansas, during the period covered by this report, has been of the most healthy character. The public revenues have been well collected, and all liabilities have been promptly met. On the 1st day of January, 1877, fifty-four thousand dollars in the bonds of the State, issued under act of March 2, 1863, matured, and were promptly paid on presentation; thus reducing the bonded debt of the State that amount. A surplus of revenue has accumulated in the treasury from various causes—the principal of which was, no session of the Legislature in 1878; until, at the close of the fiscal year, June 30th, 1878, there remains in the treasury a balance of general revenue amounting to one hundred and seventeen thousand nine hundred and twenty-seven dollars and sixty-eight cents.

The receipts and disbursements of the Treasury, from December 1, 1876, to June 30, 1877, were as follows:

DISBURSEMENTS.

Warrants drawn on General Rev. Fund, and paid, $266,387 36

613 30 17,776 04

141,380 59

2,684 79

400 00 42,607 00

$471,849 08

$378,215 80

The receipts and disbursements from July 1, 1877, to June 30,

Warrants drawn on Gen. Rev. Fund, and paid, $433,742 34

I would respectfully call your attention to the law governing the investment of the funds derived from the sale of the lands belonging to the State Normal School. Section 4 of chapter 179, Session Laws of 1877, provides that the lands shall be sold under the provisions of chapter 189, Session Laws of 1872. Section 4 of said chapter 189 provides that all moneys derived from the sales of land shall be paid into the State Treasury, and that the amount thus received as principal of the fund shall be invested by the Treasurer of State, as provided by law, in the bonds of the State of Kansas, or of the United States. Section 4 of chapter 70, General Statutes of Kansas, provides that all moneys. derived from the sale, rent or lease of the lands aforesaid, shall be invested in stocks of the United States, the State of Kansas, or some other safe and reliable stocks, as the Legislature may determine, yielding not less than six per centum per annum upon the par value of said stocks.

Under section 4, chapter 189, Session Laws of 1872, before referred to, the Legislature has determined that said funds shall be invested in bonds of the State of Kansas or of the United States. This law cannot be complied with, for the reason that State bonds cannot be purchased at any reasonable figure, neither can bonds of the United States be purchased that bear interest at the rate of six per centum per annum. This law should be amended so as to authorize the purchase of securities other than the ones quoted. It should also provide for a board of commissioners to invest the fund, consisting of at least three persons. No one man should be allowed to control this investment. During the period covered by this report I have used every effort to keep this fund invested and comply with the law. I have purchased State bonds bearing interest at six per cent. amounting to the sum of $1,600, leaving a balance in the Treasury of $4,083.70 uninvested. Had it not been for the clause prohibiting the investment in bonds other than those bearing six per cent. interest, all of this fund would have been invested in United States fourper-cent. consols.

Section 3 of article, 16, chapter 122, Session Laws of 1876, provides that the State Treasurer shall report to the State Superintendent, on the 1st day of February and 1st day of August of each year, the amount of money in his hands belonging to the Permanent School Fund, and subject to investment; and on the

1st day of March and 25th day of July of each year, shall report the amount of money in the Treasury belonging to the Annual School Fund subject to disbursement on the semi-annual dividends. In making the reports specified in the foregoing section, the Treasurer can only report the amounts then in the Treasury; he having no information of orders drawn on the Treasury and not presented for payment. To obviate the danger of overdrafts on these funds, and to provide a record that could be readily referred to in cases of erasures or alterations, I suggested to the State Superintendent of Public Instruction that all school orders be registered in the office of the Treasurer, and countersigned by the Treasurer in the same manner as warrants drawn by the Auditor of State; to which suggestion he readily consented, and the necessary records have been provided therefor. It is necessary, however, that a law should be passed requiring the State Superintendent of Public Instruction to present to the Treasurer for registration all orders drawn by him on the Treasury, or by the Commissioners for the Investment of the Permanent School Fund, and making it the duty of the Treasurer to register and countersign the same.

The State Permanent School Fund has steadily increased. February 16th, 1878, one hundred and forty thousand dollars in bonds of the United States were purchased for this fund, since which time there has been no great accumulation of currency in the Treasury over and above investments made by the Commissioners. Some of the school-district bonds held by this fund falling due are being funded under chapter 44, Session Laws of 1877. Section 4 of said act should be amended so as to limit the rate of interest to not more than seven per cent., instead of ten per cent., the present limit, for the reason that private investors pay a premium for the best of this class of bonds on account of the present high rate of interest-the Commissioners under the law being only allowed to pay par.

The Commissioners on Revision having kindly heard all suggestions made by State officers, it is unnecessary for me to refer further to defects in laws now in force.

An accurate and complete report of the transactions of this office, together with a full exhibit of the various securities of which the Treasurer is custodian, will be found in the annexed tables.

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