It is true that the mere fact that the decision in People v. Pacheco, supra, may seem to us to be incorrect and illogical so far as it applies to a period in excess of the two-year period between sessions of the legislature, would not alone justify us in departing from the rule therein laid down in the interpretation of the similar constitutional provisions in the constitution of 1879, adopted in the light of that decision, but the decisions in People v. Johnson, supra, and Nougues v. Douglass, supra, and the cases relied upon in People v. Pacheco, supra, are also a part of the constitutional history of the state, and in the light of these earlier cases we do not think it can be said that either under the constitution of 1849 or the constitution of 1879 a bonded indebtedness authorized by vote of the people would not create a debt or liability within the meaning of the constitution prohibiting an indebtedness of over $300,000, merely because the law authorizing the indebtedness and calling for a vote of the people, also provided, as the constitution required it must, ways and means for the payment of the bonds (art. XVI, sec. 1).

[1] It is clear, then, that the bond issue of $10,000,000 proposed to be submitted to the people will, if authorized by vote of the people, create an indebtedness against the state when such bonds are issued.

If the money derived from the sale of the bond issue is to be given or loaned directly to the veterans we would have exactly the question presented to the court of appeals of the state of New York in the case of People v. Westchester County Nat. Bank, supra, and which was by that court held to be a violation of the constitutional provision against the giving or loaning of the credit of the state. In one sense the loaning of money derived from the sale of bonds by the state is no more a loaning of the credit of the state than loans made by a bank of money deposited in such bank is a loan of the credit of the bank, But constitutional provisions of the character under consideration by which the people seek to limit the power of the legislature should not receive a technical construction but should be construed in the light of the evils to be remedied and the purpose to be achieved. There is no essential difference in the effect upon the state finances between selling a bond for $100 and giving the proceeds to an individual, and giving

the bond directly to the individual. The supreme court of the state of Minnesota in William Deering & Co. v. Peterson, 75 Minn. 118 [77 N. W. 568], a case involving loans to farmers for the purchase of seed wheat, said: "If the state cannot loan its credit, it cannot borrow the money on its own bonds, and then loan the money. It cannot do indirectly what it cannot do directly."

The same view was expressed by the supreme court of the state of North Carolina in the case of Galloway v. Jenkins, 63 N. C. 147. The legislature of North Carolina in 1868 had passed an act authorizing the treasurer of the state to deliver $2,000,000 in coupon bonds of the state to the Chatham Railroad Company in exchange for an equal amount of its stock. It was held that this was a giving or a lending of the credit of the state within the meaning of the constitutional prohibition, notwithstanding the fact that the state received stock of the railroad corporation of an equivalent amount in exchange for its bonds. In Webb v. Lafayette County, 67 Mo. 353, the supreme court of Missouri had under consideration the validity of a statute which authorized counties and townships to issue bonds in aid of railroads and which also provided that a portion of the state taxes derived from the counties and townships extending such aid should be applied by such counties and townships to the payment of such bonds without being remitted to the state treasury. This law was held unconstitutional as a giving or loaning of the credit of the state. In that connection the court stated as follows:

"To the extent that section 5 withdraws the state tax on such roads and applies it to the payment of a township subscription, every citizen of the state, in effect, and in fact, is required to pay a part of such subscription, when section 13 of the constitution declares, 'that the credit of the state shall not be given or loaned in aid of any person, association or corporation.' It is no answer to this to say that this is not giving or loaning the credit of the state. We agree that it is not done directly, but that it is done indirectly is clear; for what is the difference between giving this tax directly to the railroad corporation, and giving it to a township to pay a debt contracted to such a corporaCan that be done indirectly which is forbidden to be done directly? If so, constitutional inhibitions accom

tion?

plish nothing, and organic laws may be set at naught by the merest evasion. We admit the power of the General Assembly to control and dispose of the funds and revenues of the state, in its fullest and broadest sense, but when it is limited and restricted by the constitution, it is to be exercised only in conformity thereto, and not simply according to legislative will."

[2] So far as our research reveals, the decisions are unanimous upon the proposition that this provision of the constitution prohibiting the giving or loaning of credit should be construed liberally to effect its purpose. Such construction would, therefore, prohibit any plan or scheme by which in substance and effect the credit of the state is given or loaned, regardless of the particular form which the transaction takes. In two recent decisions upholding the issuance of bonds to be devoted to the raising of money to pay veterans a bonus, provisions of the state constitutions involved prohibiting the giving or loaning of the credit of the state were not considered. This was pointed out in People v. Westchester County Nat. Bank, supra: "In Minnesota the money necessary to pay a bonus was to be borrowed. It was held that the purpose of the loan was public and the act constitutional. A clause like ours was

in the Constitution (Sec. 10, art. 9), but this phase of the matter seems not to have been argued. Certainly it was not referred to in the opinion. (Gustafson v. Rhinow, 144 Minn. 415 [175 N. W. 903].) Again in Washington a bonus was to be financed by an issue of bonds. Again, too, a similar clause in the Constitution (Sec. 5, art. 8) was not referred to. But in discussing whether the purpose of the act was public, the court did say that moral obligation to make a compensation rested on the state (State ex rel. Hart v. Clausen, 113 Wash. 570 [194 Pac. 793]).”

In State v. Johnson, 170 Wis. 218 [175 N. W. 589], one of the points raised was: "The act violates the provisions of Sec. 3 of Art. 8 of the Constitution, which inhibits the giving or loaning of the credit of the state in aid of any individual." The question thus raised is not discussed in the opinion, for the reason evidently that the scheme there under consideration was one by which the state levied a tax for a number of years and authorized its expenditure and therefore did not create a debt because there was no

assumption of any obligation and the arrangement was to give money to the veterans when obtained from year to year by taxation.

[3] The plan contemplated by the Veterans' Farm and Home Purchasing Act to which a portion of the money raised by the bond issue is to be devoted is substantially this: The veteran selects the farm or the home which he desires to purchase and calls the attention of the Veterans' Welfare Board to his desire to purchase this particular piece of property. If they approve of the application they purchase the land with the money of the state derived from this bond issue and sell to the veteran for the same price plus interest and a due proportion of the expense of the administration of the law, upon terms of payment by which the repayment to the state may be extended over forty years. There is no essential or substantial difference between this procedure and the procedure which would be involved in loaning the purchase price of the land directly to the veteran and taking a mortgage back upon the property he purchased with the money so loaned. It is impossible to escape the conclusion that this is in substance and effect a loaning of the credit of the state to the veteran purchasing the farm or home. No advantage is gained by the state by reason of these loans except the fundamental and underlying advantage which is supposed to accrue from all statutes making provisions for veterans; that is, a stimulation of patriotism on the part of others who may be called upon to engage in future wars and the promotion of the general welfare by giving due recognition and reward to those who in their service for their country have jeopardized their lives and accepted the hazards of war for the purpose of perpetuating the institution under which they live. While these considerations may well justify the classification of citizens so that such veterans receive special consideration in the making of such loans, it cannot deprive the transaction of its essential characteristics of a gift or loan of the credit of the state.

The Veterans' Bond Act of 1921 also provides for the use of the proceeds of the bonds by the Veterans' Board in connection with the purchase, improvement, subdivision, and sale of large tracts of land contemplated by and provided for in the Veterans' Welfare Act. It is pointed out that

another bond issue is pending for this same general purchase, but authorizing the purchase of the land so purchased, improved, and subdivided by settlers other than veterans. Two such settlements have already been provided for by direct appropriation of money for that purpose (Stats. 1917, p. 1566). In this scheme of subdivision in the Veterans' Welfare Act as well as in the provisions of the Veterans' Farm and Home Purchase Act for the direct purchase of individual farms or residences for the benefit of the veteran, the state pays the purchase price of the land and sells to the veteran on long terms of credit. There is, however, a very essential difference between the two schemes. In the one no benefit accrued to the state other than the indirect one involved in the reward of the veteran; in the other there is carried out a policy of land settlement. In the case of the land settlement provision an object is achieved other than the mere extending of credit to veterans. In the case of Veterans' Welfare Board v. Riley, 188 Cal. 607 [206 Pac. 631], we called attention to the fact that the decisions were not uniform with relation to the question as to whether or not a plan of purchase and subdivision of land was a public purpose for which public money might be appropriated and used, and in that case we placed our decision as to the constitutionality of the act upon the ground that the statute authorized expenditures in aid of veterans, which is conceded to be a public purpose, and gave aid in such a way as not to violate the constitutional provisions under consideration with regard to giving of the money and credit of the state. If the purpose achieved by the purchase and subdivision and settlement of the land is a public purpose and justifies the expenditure of public money, and if the scheme provided by the Veterans' Bond Act and the Veterans' Welfare Act for the purchase and subdivision of which such land accomplishes this public purpose, it may well be that we would not be justified in declaring such a law unconstitutional because of the fact that incidental to the main purpose there was an advantage to the purchaser of the land ultimately derived from the credit of the state. If we look at the form of the transaction it is not a giving or a loaning of the credit of the state; it is a purchase of land by the state, a sale of that land and an extension of credit for the purchase price. If