By the first and subsequent constitutions of the State of Michigan, all fines and penalties collected for violation of State law were set aside for the support of school district libraries. Each county is given the fines collected within its boundaries, and the county treasurer divides that amount among the school districts of the county according to the number of children of school age each district has, following a schedule made out by the State superintendent of public instruction.
In the year 1867 the Union School District of the City of Bay City was organized. Because of the state constitutional provision in regard to penal fines, and because of a clause in the City Charter requiring the City Council to appropriate at least $200 to the library fund of the school district yearly, there stood to the credit of said library fund in the year 1876 a nine year accumulation in the amount of $2,899.25. It had become apparent to many residents, both members of the Library Association and those who were not members, that a privately owned library, however good, could not do what a public library was supposed to do, and therefore would never satisfy the people of the city who were clamoring for a public library.
It happened that several members of the school board were also prominent members of the Library Association. One of these gentlemen was president of the School Board and moreover had just been appointed by the Library Association to be chairman of the committee that in some way was to find a new building for the Library to take the place of the quarters in the Averill Building. It was generally felt in the city that the library assets should be combined for the benefit of the residents. One library, rightly supported would be enough for a city. Finally, an offer was made by the Library Association to the City, through H.M. Fitzhugh, a member of the governing body of the Library Association and also the President of the School Board. The Association offered to loan to the School Board for a period of twenty years, its six thousand books and its library furniture, for the purpose of establishing a free public library, on the condition that the library should always be operated as a free public library and that the money which the Union School District had accumulated in its library fund should immediately be spent for books. A contract to this effect was drawn up and agreed to by both parties, the School Board and the Library Association. As soon as this consolidation was made public, the old Library Association held its last meeting and voted to add the money remaining in their book fund to the School board money, which was to be spent for new books, and then all the perpetual members and most of the life members being present, voted itself out of existence as an association, by signing a deed of sale transferring all their interest in the books and other property of the old organization to the trustees of the new public library, thus dedicating all their pervious labor and expense to the people of Bay City and making a firm foundation for the new library.
The management of the new library was vested in a Library Committee that was composed of three members of the old Library Association and three members of the School Board. This committee showed itself energetic and interested. It forthwith published an order declaring that the Public Library would be open six days in the week instead of three, and published notices at once in the papers of the county advertising the Library as free for all residents in the city. After this the Building Committee of which H.M. Fitzhugh was chairman, grappled with the problem of suitable quarters.