Page:Oregon Historical Quarterly volume 11.djvu/445

 Financial History of Oregon 415 out of the fund arising from the five per cent of the proceeds of the sales of public lands within the state; should this fund prove insufficient, the proceeds from the sales of the "internal improvements" grant should be used. 1 The proffered subsidy that was not to be available until after the "satisfactory completion" of the improvement did not secure the construction of the canal and locks. So at the next session of the legislature in 1870 it was enacted that state bonds to the amount of $200,000 should be issued and deliv- ered to this corporation on its giving surety to the amount of $300,000 that it would have the canal and locks completed at a date that gave about two years for the construction of the works. As with the preceding pledge, the means for the pay- ment of the interest and principal of the bonds were to be taken from the five per cent net proceeds fund and from the proceeds of the internal improvement grant. As these resources of the state were received from the national government for internal improvement purposes, and as this bond issue merely anticipated moneys that were certain to be forthcoming, the "canal and locks bonds" issue was not counted as indebtedness and hence not in violation of the restrictions of the constitu- tion. These bonds were payable in ten years, bearing interest at seven per cent, payable semi-annually, principal and interest payable in gold. These bonds were disposed of by the canal and lock company for some $160,000. The act granting the subsidy specified the rate of toll and provided as "the express condition" on which the subsidy was granted that the corpora- tion should pay ten per cent of its net profits into the common school fund of the state. The sum actually paid back into the state treasury in fulfillment of this provision of the grant was. $435, a payment made in 1873. So much did the state realize out of its "express condition." When recently the claims of the state in this matter were pressed, the courts decided that they had lapsed. There was a stipulation, too, in the grant giving the state the right to appropriate the works i General Laws, 1868, pp. 46-49.