CHAPTER VII

MONEY GRANTS IN SUPPORT OF EDUCATION

A. THE "FIVE PER CENT" FUNDS

THE grants by the Federal Government in aid of education have not been limited to lands, but the huge aggregate of the land grants and their distribution throughout the country have combined to make the public familiar with this type of endowment, while the facts regarding the money grants are far less widely known.

The first grant of money was to the State of Ohio in the act of April 30, 1802, but it was not for educational purposes. Five per cent of the net proceeds of the sale of public lands in Ohio, after June 30, 1803, was to be given to the state for "laying out and making public roads." The act admitting Illinois, passed in 1818, donated to the state five per cent of the net sales of the public lands within its borders, with the proviso that two fifths should be spent 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.” In order to make use of this fund, the first normal

school established in that state, in 1857, was called the

Illinois State Normal University.

1 This table has been prepared from facts given by Cubberley and Elliott, State and County School Administration, p. 48 (quoted from Report of the Commissioner of the General Land Office), and from data in Part II of Swift's Public Permanent Common School Funds.

School fund

Perpetual common-school fund

The clause setting aside a portion of the five per cent fund to the use of education did not again occur until about 1845 when the states themselves began to request it. Twenty-nine states have received such funds from the Federal Government and practically every state admitted since 1860 must apply them to educational uses. The Enabling Act of Oklahoma (1906) makes this five per cent fund into a permanent fund, "the interest only of which shall be expended for the support of the common schools within said State."

The table on the preceding page shows the aggregate of such funds on June 30, 1913, and the educational uses to which they must be put where such usage has been either required by Congress or voluntarily decreed by the legislature of the state.

Many of the funds shown above are increasing as public lands are sold, — at a present rate of about $200,000 annually. No public lands remain in the older states, such as Ohio, Indiana, Illinois, and Iowa, and therefore the funds have reached their maximum, but the Government still retains title to a substantial acreage in the Rocky Mountain and Pacific Coast sections.

B. THE DISTRIBUTION OF THE SURPLUS REVENUE The largest single distribution of money by the Federal Government, however, was made by the act of June, 1836, which apportioned to the states a surplus of twentyeight million dollars that had accumulated in the Federal

treasury. The distribution, which was, legally, a deposit subject to the order of the Secretary of the Treasury but which has never been called for, was made on January 1, 1837; on that day all the money in the treasury except $5,000,000 was put on deposit with the states, the allotment made to the several states being "in proportion to their respective representation in the Senate and House of Representatives of the United States." This was most favorable to the original states which had the largest population at that time and consequently the largest representation in Congress. For fifteen years or more some plan of giving money to the states that did not share in the educational land grants of Congress had been urged, and the act of 1836 was a step in this direction, but it was not the end of the effort, as will be shown later. The accompanying table shows the distribution and uses of the Surplus Revenue Fund. It is particularly instructive in revealing the variations in their employment of Federal subvenĮ tions when the purposes for which the money should be spent are not specified. That so large a proportion of the total amount distributed should have been used for education is significant when one remembers that but few states at that time had made substantial provisions for public schools.

1

1 Made from data in Swift's Public Permanent Common School Funds, pp. 74-78, and in Cubberley and Elliott's State and County School Administration, pp. 52–57.

Two thirds used to pay the

state's debt to the school fund. This was borrowed and spent by the state for internal improvements. State now pays 6% interest on $335,592 to the school fund.

In 1851, portion of fund then intact, $567,126, put into school fund.

In 1837, $850,000 put into school fund, but interest was used to pay state expenses. In 1851, school portion and interest due were capitalized at $1,326,770. State pays interest on this to school fund.

Used for state debts. Constitution of 1852 set aside interest for school fund. Constitution of 1864 repealed this provision. Since 1876, interest is paid by state to school fund.