Fremont journal. [volume] (Fremont, Sandusky County [Ohio]) 1853-1866, 1858-01-08


OF the defalcation upon the public interest,
as far ms possible, averted do not doubt
that you will promptly provide for tho pay
mcnt Of tho interest which has accrued up.
on the advances so honorably and literally
made.
The arrangement with tho Trust Comma
ny resulted in unforeseen advantage to tho
State.
AT the time of Mr.. Gibson's resignation,
according to the Treasury books, there wore
in his custody as Treasurer, State six per
cent. bonds to the amount of $209,G29 IA,
deposited as security for the circulating notes
of the Seneca County Bank. OF these
bonds, It was soon afterwards ascertained
that Sl32,I2 Ia, had been sent to New
York, TO be converted, as was alleged, into
other bonds of q different date; and $780,
600 of these had been placed in the hands
of Atwood d CO., with authority to sell !;
and drafts had been made OH that firm, and
accepted and paid by it, on this credit, to
the amount of $5s,5OO. Proceedings in
behalfof the State were Immediately insti-
tuted to obtain possession of these bonds,
which resulted in an arrangement, by which
tho bonds were transferred to the Ohio Life
Insurance and Trust Company, to be trans
fcrred to the State, as soon as the money
advanced by that institution in discharge Of
the claim Of Atwood d. Co. should be real
lied out of certain securities deposited hy
Mr. Gibson. Before tho making Of the
transfer according to this arrangement, the
Trust company failed; and it was ascer-
tanned that the bonds had been converted
| by its Cashier to his own use or that of the
institution, by which means the Trust Com
pany had become the debtor of the State in
their full amount. Other funds Of the State
in the bands of the Trust Company were
also converted in the samo manner. The
whole amount thus embczzled was nearly
equal TO the sum advanced, and would have
boon almost, if not altogether total loss,
had not the arrangement for the payment
of the July interest created more than
equal debt to the Trust Company, and thus
secured the State against the possibility of
loss by its failure.
Until within a very recent period no ef-
fectual Legislative guards had been provided
for the security of the Treasury. The Leg
islation of 1856 and 1857, in great part
supplied this defect. 1t made the Auditor
of State the chief accounting officer of the
Treasury, and required all payments as well
as all disbursements to be made upon his
warrant; it directed tho commissioners of
the Sinking Fund to withdraw from the
| Treasury from time TO time the moneys be-
longing to that fund; itprovided for the ap-
pOintment of depositaries subordinate to the
Treasury, and required of them ample secu-
rites for all monies deposited with them;
and introduced other important checks upon
the action of the Treasurer.
Had these provisions of law been adopted
Immediately after the ratification of the
present Constitution, it is highly improba-
bic that the present defalcation which now
embarrasscs our finances could have oc-
cured.
1t will be observed that the system now
established resembles, in some respects, that
of the Independent Treasury of the United
States. The resemblance would be almost
complete except rs TO receipts and disburse-
ments ofrevenuo in coin, if the Treasurer
of State were excluded from actual custody
Of public money, and all payments were re-
quired to be made to dcpositaries, and dis
bursements by drafts upon them, under
suitable restrictions and regulations.
] recommend n provision of this nature,
and that hereafter all public moneys be re-
quircd to be collected and dlshnrsed in spe-
Gle or notes of specie paying banks of this
State, and that no payment be made from
the Treasury of any sum under twenty dol
lars otherwise than in coin. Every guard
which legislative wisdom can devise should
DO provided against futuie misuse Of public
funds. ] recommend, also, that provision
be made for thorough examinations into the
condition of the County Treasures, and full
reports Of the results for the information Of
the General Assembly.
Some further provision Of law is necessa-
ry in regard to the custody and transfer OF
State aud Federal bonds held by officers
of State, as security for the circulation OF
banks. At present the bonds belonging t.
the Independent Banks are held 10y the
Treasurer while those belonging TO the Free
f Banks are held by tho Auditor In case OF
insolvency, the bonds are required to be
sold by the officers holding them, and the
proceeds applied in full or pro rata payment
2 Of tho circulation. The large powers con
= ferred for these ends are liable to grcat
: abuse, and have in fact, been greatly abused
: | see no reason why the bonds belonging tc
$ all the banks should not be deposited witt
: the Treasurer, and such checks imposed up
e on his action, through the agency of the
q Auditor and otherwise, as will eflectually
: guard against all abuse. l respectfully rec
,, ommend to your favorable consideration the
+ Suggestions contained in the report Of th'
II second special examination of the Treasur,
# herewith transmitted.
i The transactions above detailed, togethe
1t with the outstanding liabilities of 1856
o have seriously affected the financial condi
y ton of the State, as connected with revenu
and disbursement.
To obtain clear idea Of the actual stu
alton, it will be necessary to revert to tn
: close of the fiscal year l854-5.
;, The balance in the Treasury on the 18th No
IL vember, 1855, applicable 10 the disbursements
10 oflS55-6, was, according to the report Of the
late Auditor OF State -$1O3, ,U1O
m But of this balance there had been deposited
ar with failed banks and bankers, by the ontgo: g
- | ing treasurer S2O4 ,63b 90
Se And there was retained by him under claims for
exchange, though not credited by the Audi
" IL, ,457 10
"a And there had been unlawfully distracted, as
appeared from the report of Mr.. Sparrow and
of the present Treasurer rer-----..-----57991 91l 90
= Making an aggregate of.---.-...--.--.. 500, ,OO4