Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1885-03-07
ROBBED THE STATE,
shrewd Financierihg That Beat
Missouri 0ficials.
HOW THE SCHEME WAS 'woRkEO.
The Story of Brave John BiNns the
New York Fireman
Told
AFTER MONTHS OF FoReETFULNEss.

ST. LOUIS, March 4.-Senstors bonu anu
Wear, of St. Louis, and Representative
Childs, of Kansas City have had their heads
together at the Capital for week past, look
ing up the financial condition Of the State,
its credit and the prices brought BY its
bonds, One result of this investigation is
the discovery of discrepancy in the last
series of bond purchases between theamount
actually paid by the State for the bonds,
and their actual selling price, The figures
they display show grave state OF affairs,
and afford the State fiscal agents, kohn,
Pepper Il Co., Of New York, with an oppor
tunity to display their instructions. For
two years past the State has been
buying its own bonds in the
New York market. Mr., Childs has
drawn a resolution which he will introduce
in the Assembly next Saturday, calling for
an investigation of the accounts OF the
State Fund Commissioners. The announce
ment of Mr. Childs's intention caused tre-
mendous sensation in financial circles to-
day. The resolution states that the fiscal
agents OF the Commissioners have diverted
SI5l, ,623. 90 of money belonging to the State
of Missouri to their own uses, and after an &C.
counting instructed the Attorney General to
enter suit against Kohn, Pepper 4 Co. for
the amount named if it appears that greater
amounts were charged the State for the
bonds sold than the market price for each
day upon which sales were made to the
State.
Summarized.
The whole situation IS summarized IN a
table which shows that during the years
1888 and 1884 each purchase of Missouri
bonds made by the Fund Commissioners
through their New York agents was at
price in excess Of the highest market price
Of the bonds in open market. The table
shows that the whole amount paid By
the State was 81, 1886, 237. .25 and the amount
paid for bonds which were worth at the
very highest rates obtained on the Stock Ex-
change of New York was 81, lS3, $3.50. In
other words Missouri has paid Sl5l, $3.50
to the firm of Kohn, Pepper & Co., for
which no return has been received. These
figures are taken from the Auditors books.
They are the selfrecorded history of the
work of the Fund Commissioners and the
prices are taken from the official records of
The New York Stock Exchange. Together
they make case from which there is no
escape.
Simply a Contract.
But while Kohn, Pepper & Co. have made
$l5l, ,623. so for two years work for the Fund
Commissioners of Missouri over and above
commissions no one charges them with the
least incorrect conduct. The firm simply
carried out the contract which they had
made with the Fund Commissioners and
which they had a perfect right to make.
The persons who are to blame for this most
remarkable piece of bad financiering are
the Fund Commissioners, who were Govern
or Crittenden, Attorney General Mcintyre
and State Auditor Walker. These gentlemen
chose the firm os Kohn, Pepper Il Co. as
their fiscal agents, and instructedthem to buy
Missouri skies upon basis of 3 per cent;
that is, the fiscal agents were to buy the
bonds of Missouri at so much of premium
that the amount paid for each bond would
represent the capitalized sum, which would
pay 5 per cent interest. The fiscal agents
we're not instructed to buy at the market
price OF the bonds. The limit which the
tulQ commissioners SCI lOE
ton was that figure which 6 per cent
bond would have to sell for in order to
make its return per cent instead of 6 per
cent. The Fund Commissioners do not
seem to have required state
ment as to the market price Of
the bonds. They have only inquired as
TO whether they were bought upon the 3 per
cent basis. Their instructions to Kohn,
Pepper 4 Co. are said to be explicit and
unmistakable The bonds we're to be bought
on the per cent basis, and the commits
sion apparently never troubled themselves
to ascertain whether the bonds could not be
bought for less than their limit During
the panic in May, 1884, and later Missouri
skies dropped to par.
1t is believed here that the firm, which is
wealthy intelligent and enterprising house,
must have seen that there was profit to be
made in buying Missouri SKIES at 500
each, which were to be bought later by the
State on q 3 per cent. basis. OF course it
is not known that this was done.