Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/communicationofrOOhamirich COMMUNICATION OF KEGENT HAMILTON, October 28th, 1874. UNIVERSITY. Fcijcts in regard to sale of lands donated by Congress, and the in- vestment of proceeds. The Regents tell us (page thirtj^-seven of their statements), that they have either sold or contracted to sell the entire grant of 150,000 acres at $5.00 per acre in gold coin net, 20 percent, being paid down, and the remaining 80 per cent, bearing in- terest at 10 per cent, which should give us a productive fund of $750,000, or an income of $75,000 per annum. With prudent management this would be the value of the Congressional grant to-day, even at the low price (for California) of five dollars per acre. The law of Congress requires the proceeds from the Grant to be invested in United States stocks. State, or other safe stocks. Paying no attention, to this requirement, the Regents have invested it as follows : Of the $114,025 47 cash' received of purchasers $20,000 was invested in a vacant block in the city of Oakland, for which the Agricultural Department had no use whatever, $11,386 25 in paying interest on a debt injudicious- ly assunied by the Regents, $2,929 26 for some purpose not exj^lained, amounting in all to $34,315 57 expended for the purchase of the Bray ton estate, for which Regent Tompkins was agent. The remainder, $79,709 96, is deposited by the Treasurer of the University, Regent Ralston, in the Bank of 2 REGENT HAMILTON S COMMUNICATION. California, of which Kegent and Treasurer Ealston is Presi- dent, and bears interest at six per cent, per annum, while the Kegents of the University, on a mortgage of $50,000 assumed in the purchase of the aforesaid Bray ton Estate, are paying nine per cent, per annum. The 80 per cent, credit upon $150,663 58, is in the form of notes bearing interest at the rate of 10 per cent, per annum. Applications on file with the Land Agent of the University, and certificates of deposit to the amount of $94,573 are now in his hands, and this money all or mostly in the Bank of Cali- fornia. No account for interest allowed appears in the exhibit of the Regents, though we learn that in connection with recent events, interest has lately been paid. Four dollars credit per acre on 94,573 acres, amounting to $378,292, should have bean drawing interest, otherwise the in- come from the Land Fund is diminished at the rate of $37,829 per annum. A still more serious evil appears in the fact that the Regents have so framed their regulations that the purchaser is not obliged to j)ay interest on the credit portion of his purchase money, until his title is obtained. The time intervening be- tween the application and rendering of patent may be extended for years, while the land is occupied and cleared of timber. No bonds had been given guarding against such a contingen- cy up to the first of July last, while on page thirty-six of the Regents' statement we find that 8,840 acres have been forfeited by applicants and returned to the land fund. We have seen from the Regents' statements, that $79,709 96 of the Agricultural Land Fund, was drawing six per cent, in- terest in the Bank of California, and $94,573 drawing no inter- est at all, up to the first of July last, as appears from the books. In the " Statements;" page 34, we are informed that "the remainder, $34,315 51, was temporarily invested in the pur- chase of four full blocks, with extensive improvements, in the heart of the gTowing city of Oakland, being the property form- erly owned by the College of California, and the Brayton es- tate. This property is subject to a mortgage of $50,000, bear- ing interest at the rate of nine per cent, per anuum;" and they are loaning nearly twice the amount to the Bank of California, at six per cent, at the same time ! " It has cost to date, including $11,386 25 paid as interesi REGENT HAMILTON S COMMUNICATION. 6 on the mortgage, the sum of $112,476 25, and is valued by the most competent experts at a mimimum of $150,000." This statement is manifestly incorrect. These four blocks cost the University $49,030 04 (see p. 40). Other j)roperty was re- ceived with this block and turned over to Mrs. Bray ton in part payment for blocks Nos. 2 and 3 (see Statements, page 40). Blocks Nos. 2 and 3 cost $94,315 51 in this manner. The Re- gents assumed a $50,000 mortgage for Mrs. Brayton, " and transferred to the vendors the outside property, valued at about $30,000, adjoining the University site at Berkeley which had been obtained from the College of California. The property (Blocks Nos. 2 and 3), was thus obtained without any addi- tional cash expenditure." (See same page). On the $50,000 mortgage $11,386 25 interest was paid by the Eegents, and also $2,929 51 for some unexplained purpose amounting $94,315 51, the entire cost of blocks Nos. 2 and 3. The foarth block, vacant, and of no use to the institution, was subsequently purchased of the Brayton estate for the sum of $20,000 (see p. 41). SUMMARY. Block No. 1 cost $49,030 04 Blocks Nos. 2 and 3 cost 80,000 00 Blocks " 2 and 3 cost, interest on mortgage, 11,386 25 Blocks " 2 and 3 cost, item for which no ac- count is given 2,929 26 Block No. 4 cost 20,000 00 Total cost of four Blocks "in the heaYt of the growing city of Oakland," as shown by the Re- gents $163,345 55 On the 34th page of the same " Statements" the following evident misstatement occurs with regard to the same blocks. " Since the removal of the University to Berkeley, this proper- ty is no longer essential. It is growing in value, however, yenr by year. Should it be deemed best to dispose of it, it will realize a sum, say $150,000 at least; sufficient to pay off the mortgage, of $50,000, to repay the land fun^ the $34,315 51 borrowed, and leave a surplus of $65,684 49, yielding in the shape of profit a far lai'ger interest upon the amount of the land fund invested, than could possibly have been derived from any ordinary safe investment." 4 REGENT 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 i^ese four blocks cost, years ago, $163,345 55, which was $13,345 55 more than the Regents claim them now to be worth, although — " 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. IQ-U To Messrs. Martin. Moss & Hallidie, FINANCE COMMITTEE, Of the Board of Regents of the University of California : Gentlemen-r-Detailed by you to examine the records in the offices of the Surveyor General and Controller, as far as they relate to the sale of the seventy-two sections of Seminary Lands and the ten sec- tions of Public Building Lands and the disposition of the j^roceeds 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 Seminar}^ 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 })rincipal and the first year's interest paid in advance, also the dates and 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 @ fl.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 jjaid County Treasurer of 2^ per cent, v 1,354.15 Net ijroceeds due State Treasury §52,81 1. 76 PUBLIC BUILDING LAND SALES. 5,281.58 Acres, Payment in full at §1.25 per acre §6,601.97 <i40 " 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 Xet proceeds due State Treasury §6,592.92