4 KEGENT HAMILTON S COMMUNICATION. This statement was probably intended to lead the Legisla- ture to infer that the four blocks cost but $84,000; and that $65,000 had been gained by the speculation, when in fact tjlese four blocks cost, years ago, $163,345 55, which was $13,345 55 more than the Regents claim them now to be worth, afthough " in the heart of the growing city of Oakland." But there are other causes of complaint. The outside prop- erty valued at about $30,000, adjoining the University site at Berkeley, which had been obtained from the College of Cali- fornia, transferred to Mrs. Brayton in part payment for blocks Nos. 2 and 3, was worth to the Agricultural Department of the University for experimental purposes, at least $200,000, which is probably not far from its present commercial value. This indicates that the Brayton job has cost the institution about $175,000, and robbed the Experimental Farm of nearly if not quite two hundred of ground essential in making up the neces- sary varieties of soil and location. The Regents estimate the remaining two hundred acres directly adjoining, although val- uable and sheltered for horticulture, at one thousand dollars per acre, (see page forty-sixth, same statement), while the water rights parted with are practically inestimable. To MESSRS. MARTIN. Moss & HALLIDIE, FINANCE COMMITTEE, OF THE BOARD OF REGENTS OF THE UNIVERSITY OF CALIFORNIA : Gentlemen ^Detailed by you to examine the records in the offices of the Surveyor General and Controller, as far as they relate to the vsale of the seventy-two sections of Seminary Lands and the ten sec- tions of Public Building Lands and the disposition of the proceeds arising therefrom, and all other accounts relating to the income of the University, after a careful examination, the following report is respect- fully submitted : The Land Register in the Surveyor General's office, shows that the sales of the Seminary and Public Building Lands commenced in the years 1858 and 1859, giving the number of acres sold, the date and amount of the first payment of the twenty per cent, or full payment of principal and the first year's interest paid in advance, also the dates arid payments of the balance of eighty per cent. From this Register the following statement is made to date of October 16, 1876. SEMINARY LAND SALES. 42,676.73 Acres, Payment in full @ $1.25 per Acre $53,345.91 1,520 ' 20 per cent, of principal paid 380.00 1,760 " 20 ' " " declared forfeited, .. 440.00 45,956.73 " Total Amount received $54, 165. 91 Less Commission paid County Treasurer of 2^ per cent 1,354.15 Net proceeds due State Treasury 52,811.76 PUBLIC BUILDING LAND SALES. 5,281.58 Acres, Payment in full at $1.25 per acre $6,601.97 640 " 20 per cent, of principal paid 160.00 5,921.58 Total amount received , $6,761.97 Less County Treasurer's Commission of 2 per cent. 169.05 Net proceeds due State Treasury $6,592.92 As some loss has been sustained by the defalcations of County Treasurers, the pro rata of loss to Seminary and Public Building Funds, probably may aggregate of principal and interest $2000. The Register also gives the dates o payments of the Annual inter- est, but not the amounts paid except in a few instances from which the following interest statement is made, the rate of interest was ten per cent, per annum, and in this statement is calculated from the date of the first payment of the twenty per cent, of principal. INTEREST ON SEMINARY LAND PRINCIPAL. On 42,676.73 Acres, Balance of eighty per cent $29,726.29 " 1,520 " " " " " 1,688.00 " 1,760 " ; ' " . " 650.00 Total Interest $32,070.29 Less County Treasurer's Commission of 2i per cent 801.76 Net Interest due State Treasury $31,268.53 INTEREST ON PUBLIC BUILDING LAND PRINCIPAL. On 5,281.51 Acres, Balance of eighty per cent $2,511.10 " 640 " " '' " " . 186.05 Total Interest $ 2,697.15 Less County Treasurer's Commission of 2 A- per cent 67. 43 Net Interest due State Treasury $ 2,629.72 Most of the locations on which only twenty per cent, of the princi- pal has been paid, should have been declared forfeited, as the interest thereon has not been paid for several years, in some cases the last payments of annual interest were made for the years of 1862 and 1864. Although delinquent lists have been made out and sent to District Attorneys, no action seems to have been taken. Thus over 1,500 acres are withheld from the Land Department of the University for re-entry and sale and to-day these lands stand upon the Register in the names of the original applicants. It will require action on the part of the Regents to secure from the several District Attorneys the faithful discharge of their duties in the energetic prosecution of all delinquent applicants. The Journal and Ledger of the Controller's Office, show that the sales of the Public Building Lands and interest arising therefrom were credited to the School Fund, prior to November 21, 1861. Under date of May 16th, 1862, the first credit is given and account opened with the Public Building Fund, and this account is charged with 81,068.04 paid mileage to the Directors of the Agricultural and Me- chanics Art College. On the 14th of April, 1868, this account is closed by carrying the balance to the credit of the University Fund Account and thereafter the principal and interest are credited to this Fund, making a total credit from April 21, 1860, of Public Building Land principal of $5,451.91 and of interest $2,104.99. SEMINARY LANDS. The first credit in the Controller's books from sales of Seminary Lands, is under date of July 19th, 1859, and to November 20th, 1861, are passed to the credit of the School Fund. Then a Seminary Land Fund Account is opened by the first credit under date of May 16th, 1862, and continued to May 14th, 1868, and then closed by carrying the balance to the credit of the University Fund. Up to date of May 14th, 1868, the total sales of seminary lands amounted to $12*621.84 and $13,586.20 had been received for interest. The debits of the accounts are, Investment in Soldier Relief Bonds (of par value of $22' 500 bearing seven per cent, per annum interest) at a cost of $19,594.75. Mileage paid Directors of the Agricultural and Mechanics' Arts College $1357.60 (this with the amount of $1,068.14, charged to Public Build- ing Land Fund, making a total of $2,425.64 expended by the Direc- tors in their search for a College Site) and the amount of $504 re- turned on cancellation of a certificate of Purchase, making a total debit of $21,456.35, previous to being merged into the University Fund Account. The total credits from July 19, 1859, to June 23. 1876, amount to, of Seminary Land Principal $44,675.53, and of interest $21,701.84. For a more comprehensive understanding of the relations between the statements made from the State Surveyor General's Register, (which may be considered the book of original entry,) and the books kept in the Controller's Office, that solely give the debits a.nd credits of all University Accounts, the following is submitted. COMPARATIVE RECAPITULATIONS. SEMINARY LAND PRINCIPAL. Total sales from Surveyor-General's Register 45,956.73 acres $52,811.76 Total credit of sales as per Controller's Books 44,675.53 Amount not credited to University account 8, 136. 23 SEMINARY LAND INTEREST. Total Interest as per Surveyor-General's Register * 831,268.53 Total credit of interest as per Controller's Books 21,701.84 Amount not credited to University account $ 9,566. 69 PUBLIC BUILDING LAND PRINCIPAL. Total sales from Surveyor General's Register 5,921,58 acres $6,592.92 Total Credit of sale as per Controller's Books 5,451.91 Amount not credited to University account $1,141.01 PUBLIC BUILDING LAND INTEREST. Total Interest as per Surveyor General's Register. $2,629.72 Total credit of Interest as per Controller's Books/ 2,104.99 Amount not credited to University account $ 524. 73 RECAPITULATION OF TOTALS. Amount due from Seminary Land Principal $8,136.23 " " " " Interest 9,566.69 " " Public Building Land Principal 1,141.01 " " " " " Interest.. 524.73 Total due University $19,368.66 Thus it appears that the University is entitled to a credit of $19, 368.66, less the losses sustained by defalcations of County Treasurer's. This deficiency of $19,368.66, as shown by the comparison of the books of the Surveyor General and Controller, is probably mostly caiised by erroneously crediting these funds to the School Fund. In the Sur- veyor General's report for the year 1862, 14th session, he gives the total of principal and interest of the Seminary Fund, as reported to the State Register at $25,515.09, while the Controller's books show a total amount of principal and interest of only $6,534.97. This discrepancy of $18,980.12 he accounts for by saying "that the County Treasurers will not learn to distinguish between these lands and School Lands^ and thus pay it unto the School Fund." Under the present organization, these errors cannot easily occur as the reports of County Treasurers before accepted by the Controller must be revised in the Surveyor General's Office, and certified to be correct. THE UNIVERSITY FUND. This account is opened on the Books of the Controller, July 6th, 1868, by a transfer of Coin, under Act of March 26, 1868, from the School Fund, of $44,064.00, and thereafter receives the credits of the proceeds of sales of Seminary and Public Building lands and interest thereon, the interest on Seminary Bonds, the interest on the $35,000 of Bonds transfered under act of March 26, 1868, the $200,000 ap- propriated from sale of Tide Lands under act of March 30th, 1868, the interest on Bonds purchased from proceeds of sale of Tide Lands under act of April 2d, 1870, and a transfer from the General Fund of $7,312.18, to meet in part the payment of monthly deficiencies provided for by act of March 26th, 1872, Debeting the University Fund Account with nine monthly deficiencies aggregating $45, 557. 99, (paying the balance of monthly deficiency from the General Fund to the amount of $71,780.80, which was charged to an account entitled " Support of State University.") Thus the plan adopted by the Hon. J. J Green, Controller, was to charge to the University Fund, the monthly deficiency ( pro- vided for by Act of March 26, 1872) whenever a balance could be found to pay them and when the fund was exhausted to draw upon the General Fund. By this peculiar system of accounts, he charged the monthly deficiency to two accounts. Instead of sending to the Treas- urer of the University the income accruing from time to time to the University Fund, from principal and interest collected on balance of principal due for Seminary and Public Building lands, and interest due on bonds and thus enable the Secretary of the University to deduct these amounts of income, as received, from his monthly disbursements, as required by the act of March 26, 1872, that reads "to transmit to the Controller of State a sworn statement of the receipts from ALL SOURCES OF INCOME during the month ending on that day." He consti- tuted himself the Book-keeper of your Treasurer and by his original system of accounting, neither the Treasurer or Secretary of the Uni- versity knew of the sources of income accruing in the University Fund. (See letters of Attorney General, Finance Committee and Andrew J. Moulder, in Appendix. A copy in the letter book of your 8 The University lias also lost $5,475, of interest that would have accrued had the full amount of Bonds been purchased from the pro- ceeds of the sale of Tide Lands, as provided for by Act of April 2d, 1870, to yield an annual income of $50,000. The last investment in these Bonds was made July 7th, 1874, of $168,500, this amount with former investments producing Bonds of the par value $750,000. The following statement gives the semi-annual interest credits as shown by the books of the Controller. 1872, July 12, Interest on $ 65,000 Bonds for six months .$ 1,950.00 1873, January 3, " " 200,000 " " " " ; 6,675.00 July 11, " " 400,000 " " " ' 10,()75.00 1874, January 8, " ' 400,000 " " " " 12,675.00 July, 8, " " 581,500 " " " " 15,120.00 1875, February 16, " " 750,000 " " " " 23,175.00 July, 2, " " 750,000 " ' : " " 23,175.00 1876, January 2, " " 750,000 " " " " 23,175.00 July 6, " " 750,000 " " " " 23,175,00 $139,795.00 Thus instead of complying with the Act of April. 2d, 1870, the Con- troller only invested in Bonds an amount sufficient to produce an , an- nual interest or income of $46,350.00, hence the loss to the Univer- sity of one and one-half years interest of $3,650, viz. $5,472. Yet the Hon. J. J. Green, Controller, in his Biennial Report of 1873, and 1875, says : The Act of April 2, 1870, which requires that so much of the net pro- ceeds from the sales of Tide Lands, be invested in Bonds for the bene- fit of the State University, as will yield an annual income of $50,000, has now beer fully complied with. State Capital Bonds of 1872, 7 per cent $135,000.00 State Bonds of 1873, 6 per cent 676,500.00 Total $811,500.00 These bonds yield an annual income of $50,040. Unfortunately for the Treasury of the University and the correctness of the Controller's Biennial Report, the certified statement from the present Controller and Treasurer herewith ban led you, show the fol- lowing Statement to be the correct account of the par value of Bonds purchased from the proceeds of the sale of Tide Lands. 9 State Capital Bonds of 1872, 7 per cent 135,000.00 Civil Debt Bonds of 1873, 6 per cent , 615,000.00 Total $750,000.00 Producing an annual income of $46,350.00, the balance of $61,500, in Bonds required to make up the $811,500 in Bonds, claimed by the Controller to have been purchased from the proceeds of sales of Tidfe Lands, are the Seminary Bonds of $22,500, and the $35,000 in Bonds transferred to University Fund, July 6, 1868, and refunded March 1, 1873, producing $61,500 in Civil Debt Bonds, as shown by the state- ments of the present Controller and Treasurer, Of the Seminary Land Principal, the only lawful investment, was the $19,594.75, in Soldier Relief Bonds of the par value of $22,500, this amount added to the s."), .VJ9.82, illegally used by Controller Green to pay monthly deficiency, and also an estimated amount of $1,000, lost by defalcation of County Treasurer, make a total of $26,194.57, which deducted from the total sales as shown by the books of the Controller, of $44,675,53, leaves a balance of $18,480.96, that the Regents have used for the payment of current expenses, not having been informed by the Controller of the sources from which this sum was obtained. From lack of detailed statements on the part of the Controller, the Treasurer and Secretary of the University have not been able to keep correctly the State En- dowment Interest account (derived from the Tide Land investment,) and the State appropriation accounts. Thus onthe books of the Regents, the amounts received from the State Treasury, for Stat# Endowment Interest, aggregates $134,648.37, whereas the correct amount is $139,795.00, making a difference of $5,146.63. The State Appro- priation Account on the books of the Regents gives a total of $194,826.61, made up as follows, viz : Payment of monthly deficiency 110,026. 61 Two year's appropriation, Act of 1874 84,800.00 Total as per Regent's Ledger $194,826.61 The correct amount will be obtained by deducting from the above, *1 10,026.61, $38,245.80, the amount of monthly deficiency charged to and paid from the University Fund leaving a balance of $71,780.80, received from the State appropriation of March 26th, 1872, to this amount if added the State appropriation of 1874, of $84,800.00, the total of State appropriations to the University will be $156,580.80. 10 In other words the Regents give a credit for $110,026,61, received on account of monthly deficiency, when in fact but $71,780.80, was paid from the appropriation for monthly deficiency, thus showing the necessity of the Controller giving to the Secretary of the Board of Regents, when advising him of an amount in the Treasury subject to the order of the Board, a detailed statement of the sources from which said amounts accrued. From the preceding statements the following recapitulation is given, showing a total of $38,035.52. To this amount is to be added the unpaid monthly deficiency for the month of December, 1873, of $4,184.17, THAT WAS AUDITED BY THE STATE BOARD OF EXAMINERS, BUT FOR WHICH THE CONTROLLER FAILED TO ISSUE HIS WARRANT. RECAPITULATION. Bal. due on Seminary Land Principal, per Surveyor General's Reg. .$ 8, ISO. '23 Public Building Lands, " " 1,141.01 " from Seminary Land Interest, " " " 9,56(>.(>9 Public Building Land Int. " " " 524.73 Seminary Land Principal used by Controller Green, subsequent to April 1st, 1872, to pay monthly deficiency 5,599.82 Balance in University Fund prior to January 20th, 1872, used by Controller Green, subsequent to April 1, 1872, to pay monthly deficiency 6,965.04 Unpaid Interest on $35,000 Bonds - 627. 00 Loss of Interest from Tide Land Bonds by not investing an amount to produce $50,000, per annum '5,475.00 Unpaid Monthly deficiency of December, 1873 4,184.17 142,219.69 Deduct estimated loss by defalcations of County Treasurers 2,000.00 140,219.69 To the amount of $40,219.69, is to be added the $61,500.00 in Bonds, now erroneously included as a part of the Bonds purchn S-M I form the proceeds of the sale of Tide Lands, making a grand total of $1 01 ,71 9.69 due by the State to the University. For the different Acts, Congressional and Legislative, and resolutions of the Board of Regents as well as the financial statements from which this report is made, you are referred to the abstract and statements accompanying this report. To the Gentlemen in the Offices of the Surveyor General, State Controller and Treasurer, my cordial thanks are due for their assist- ance and courtesy. Very Respectfully, J. HAM HARRIS, DECEMBER IST, 1876. 11 SAN FRANCISCO, February 10th, 1878. J. HAM HARRIS, ESQ. DEAR SIR: Please advise the Finance Committee of the amount of semi- annual interest which has accrued to the University under the Act of April 2d, 1870, since the date of your report, dated December 1st, 1876, and which has not been paid. A. S. HALLIDIE, Chairman of Finance Committee. 'SAN FRANCISCO, February 10th, 1878. A. S. HALLIDIE, ESQ., CHAIRMAN OF FINANCE COMMITTEE, DEAR SIR: In reply, would state that the semi-annual interest received by the Treasurer of the University, under Act of April 2d, 1870, due 011 the 2d of January,and 2cl of July, 1877, and 2d of January, 1878, amounted to $23,175.00, whereas the University was entitled to receive a semi-annual interest of $25,000.00, under said Act, there- fore the loss is the difference between $23,175.00 and 25,000.00, viz: $1,825.00 semi-annually from January 2d, 1877, to January 2d, 1878. Making the deficiency in interest of $ 5,475,00 To which add amount shown by my report dated December 1st, 1876.. . 101,719.69 Total amount due to January 2d, 1878 107,194.69 Yours Respectfully, J. HAM HARRIS. 10 11 APPENDIX. OFFICE OF THE ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, SACRAMENTO, April 29th, 1872. HON. JAMES J. GREEN, Controller, Etc. In answer to your communication, of April 24th, asking for a con- struction of the law of 1872, in regard to the payment of -the current expenses of the University of California, I am of the opinion that where the necessary expenses of the University for any one month exceeds the income, from all sources, of that month, that it is your duty to draw in favor of the Regents, a warrant for the deficiency provided that the amount of income and the amount of the deficiency, do not together exceed six thousand dollars, and that the amount should be drawn on the General Fund. The only matter for you to determine is the amount of income from all sources and the necessary expenses of each month; if the expenses are greater than the income, the Regents are entitled to a war- rant for the difference, reference being had to the proviso above mentioned. Yo^rs Respectfully, JOHN L. LOYE, Attorney General, Cal. 12 SAN FRANCISCO, February 10th, 1873. To HON. J. J. GREEN, Controller of State, DEAR SIR : Your letter of the 6th inst. to Andrew. J. Moulder, Sec- retary, was submitted to the Board of Regents, at their meeting held on the 7th inst, and by the Board was referred to the undersigned constituting the Finance Committee. We desire .to call attention more particularly to the following ex- tract from your letter, " There is no money remaining on the Sem- inary or University Fund. This Fund is derived from sale of lands and interest on.Bonds, and was considered by the Board of Examiners and myself to be one of the sources of Revenue that must be exhausted before your claim for monthly deficiency could be allowed from the General Fund. The claims for monthly support were therefore credited and paid from this Fund until exhausted, then from General Fund." On behalt of the Regents we must dissent from this interpreta- tion of the rights of the University. We respectfully submit : 1st.- That the Regents had a right to draw on the 1st of January and 1st of July, 1872, and on the 1st of January, 1873, the semi annual interest that accrued at those respective dates on the Prin- cipal of the Seminary or University Fund, (so-called.) See last three lines of Clause First of section 20, of an Act entitled, " An Act to create and organize the University of California." Approved, March 23d, 1868. 2d. That the Regents had a right to draw on the 1st of July, 1872, and the 1st of January, 1873, the semi-annual interest that accrued at those dates on the Bonds purchased with the net proceeds of the sale of Tide Lands. See 5th, 6th, and 7th lines of section 4, of an Act entitled, "An Act for the Endowment of the University of Califormia." Approved April 2d, 1870. i 3d. The Act of March 26th, 1872, entitled "An Act to provide for the support of the University of California," .did not expressly or 13 impliedly repeal the two Acts herein before set forth, nor did it mpair any rights by them vested in the Regents of the University. We urge with confidence that the proper course to pursue in the premises is this : The Regents to draw from the University Fund all the income that may have accrued from the two sources of Revenue, first above men- tioned, and then, the Secretary as required by the Acts of March 26th, 1872, embody in his sworn statement to the Controller of State, the receipts from this, as well as from all other sources of income dur- ing the month. We are fully satisfied that the income from the Seminary and from the Tide Land Bond Fund, to which it is not disputed the Regents have a right, ought to pass through and appear upon the books of the Treasurer of the University. This cannot be under the practise adopted by you. We submit further that your ruling does an injustice to the Uni- versity in this: The Act of March 26, 1872, is so couched that should the necessary expenses of the University exceed $6,000, the excess however great cannot be collected from the State during that month, neither can it be carried forward as a charge against the succeeding month, even though there may be ample margin within the $6,000 limit in said succeed- ing month out of which to pay said excess. In other words neither iexcess or deficiency can be carried forward from one month to another. In like manner, should " the receipt from all sources of income," reported in the sworn statement of the Secretary, exceed in any month the sum of $6,000, the Regents could draw nothing from the General Fund, during that month, but it is equally clear the excess should not be charged against them for the succeeding month. Under the practice indicated by your letter, you do in effect charge the excess of <>iu- month to account of the next, until the total amount to the credit of the Regents in the University Fund is exhausted. Tn conclusion, we do respectfully, but most eanrestly beg of you to reconsider your ruling and that you will permit the Regents to draw, as they have several times done before, the amount of interest that has accrued to the University Fund, since the date of their last col- 14 lection, and they, in turn will report it, among their sources of income, as required by law. We have commissioned Mr. Moulder, the Sec- retary of the Board, to present this letter in person and on behalf of the Regents of the University, to make such representations to your- self and the members of the State Board of Examiners, as will con- vince you of the justice of the claim of the University. We are, with much respect, WM. C. RALSTON, S. F. BUTTERWORTH, A. S. HALLADIE, J. MORA MOSS, A. J. BOWIE, Finance Committee of the Regents of the University, 15 SAN FRANCISCO, October 10th, 1876. J. WEST MARTIN, ESQ., OF FINANCE COMMITTEE, REGENTS OF THE UNIVERSITY. DEAR SIR: Referring to the application made by the Board of Regents in 1873, during my administration as Secretary, for the sum of $16,800, accumulated interest, earned by the University Fund, and the Uni- versity Endowment Fund, I would state that in conformity with res- olution of the Regents, a requisition was made on the Controller of State for a warrant for the amount in favor of W. C. Ralston, Treas- urer of the University. The requisition or claim was first submitted to the State Board of Examiners, for their approval and endorsement. Although they had approved on at least two prior occasions claims for Interest on the University Fund, ( never before on the University ENDOWMENT Fund) they declined to approve this, because the Con- troller (Green,) announced that he would not draw the warrant for it. Subsequently, the Finance Committee of the Regents addressed a communication to the Controller, strongly urging the arguments in sup. port of the claim. These arguments satisfied the Board of Examiners of its justice and in an interview between the Regents and Gov. Booth, and Drury Melone, Sec. of State, and ex-ofiicio' members of the Board of Examiners, these gentlemen expressed their willingness to audit the claim, but averred that it would be of 110 use unless the Controller would agree to draw the warrant. This he persistently refused to do, on what seemed to me, the most flimsy pretext, and there the mat- t<"- ended. It was impossible for me to escape the conviction then, and I am equally positive now, that the amount was justly due the fnts. If it was due then, no statute of limitations bars your ri.uht to collect it now. I am, very truly yours, ANDREW. J. MOULDER. STATEMENT OF THE OF THE LAND DEP ARTIE OF THE UNIVERSITY OF CALIFORNIA From Sept. 1st, 1869, to Feb. 1st, 1878. LIBRA R Y UNIVERSITY OF CALIFORNIA. =