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Caption: Book - History of the University (Powell)
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Seminary and College Funds 163 amendment passed unanimously and when this bill became a law April 18, 1818, it contained the following proposition which was later accepted by the territorial convention: !' third. That five percent of the net proceeds of the lands lying within such State, and which shall be sold by Congress, from and after the first day of January, one thousand eight hundred and nineteen, after deducting all expenses incident to the same, shall be reserved for the purposes following, viz: two-fifths to be disbursed, under the direction of Congress, in making roads leading to the State; the residue to be appropriated, by the Legislature of the State, for the encouragement of learning, of which one-sixth part shall be exclusively bestowed on a college or university." 16 This onesixth part of the three per cent which was set aside for educational purposes came to be known as the university or college fund. Congress had stipulated that this money should be administered by the state subject to congressional approval; consequently to provide for the execution of the grant, an act was passed by congress December 12, 1820, by which these payments should be made to the state in return for which the latter should render to the secretary of the treasury an annual report setting forth the disposition of the funds. The following year the state treasurer was authorized by the legislature to deposit the proceeds from the three per cent grant, which included both the common school fund and the university fund, in the state bank at six per cent interest. By act of 1829, the state legislature authorized the governor to borrow the three per cent fund as well as the seminary fund to relieve the financial embarrassment of the state.17 The state was to pay six per cent interest but since this was merely added to the original debt each year and was not to be collected until the entire amount was repaid it entailed no pecuniary obligation and came to be a mere matter of bookkeeping. Naturally, under this arrangement, the state failed to make reports to the secretary of the treasury as it had agreed to do; and therefore further payments were refused until "Annals of Congress, 1818, p. 2546, 1678. "Annals of Congress, 1820-1821, p.1790; Laws of\18B1, p. 92; Laws o/ 1829, p. 118.
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