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Duffus, William M. / Report on agricultural settlement and farm ownership. Part I: state loans to farmers

Chapter V. History of state loans on real estate mortgages in New York, New Jersey, and Wisconsin,   pp. 103-112 PDF (2.5 MB)

Page 110

was assessed at $85 and against which two judgments, one for
$75 and one for $500, had already been granted.
   In 1856 it became known that frauds had been committed in
 the conduct of the state land office, as the department presided
 over by the school and university land commissioners was called.
 These frauds were present both in the administration of the
 educational funds and in the sale of state lands and were so
 serious that a select committee was appointed by the legislature
 to investigate the offices of the state treasurer, the secretary of
 state and the land office.
   This investigation revealed the existence of wholesale corrup-
tion and criminal negligence in the management of both the
branches of the work of the land office. Conditions indeed were
so bad that Governor William A. Barstow and his associates in
government have passed down into history as "The Forty
Thieves." It is not necessary to go into much detail with re-
spect to the report of the investigating committee but it is worth
while to consider the substance of their findings concerning
the investment of the school funds in real estate mortgages.
Quoting DE. PHELAN: 7
  "The losses through defective mortgages taken to secure loans from
the funds were indeed very great. The defective and irregular mort-
gages numbered 119 and represented $41,896.60. The law required
that the attorney-general should examine all mortgages, title papers,
etc., relating to loans and should certify to the correctness of the
same before the loan should be made. Some loans were made with-
out regard to this provision and consequently some of the securities
held were doubtful or even worthless. Some mortgages certified to
by the attorney-general were so defective that they could not be fore-
closed. In some cases no amount was stated in the note accompany-
ing the mortgage; in other cases no amount was named In the mort-
gage. Some mortgages wore no seal; some were not dated. Many
were left unrecorded, thus giving the mortgagor time and opportun-
ity to alienate the mortgaged property. In one case at least this was
actually done. * * * In some cases no mortgage was taken; in
others the same land was mortgaged to secure two loans. Many loans
were of more than $500, which was contrary to law. The funds were
managed with utter disregard for the law and for their safety and
'Work cited, page 243.

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