The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1891-07-19
INTEREST ON PUBLIC FUNDS.

The experts appointed to investigate
treasurer of Philadelphia, find that from
the time he entered on the duties of the
office he began to appropriate to his own
use the interest on public funds depOs-
tied in various banks. The Keystone
Bank paid him regularly $1,000 a month.
The total amount of interest thus re-
ceived from banks and converted to his
own use during three years, from 1889 to
1891. amounted To 1902, 493. Strictly
speaking, every dollar of this belonged
to the city and State.
The subject is one of general impor-
lance, and ought to be made one of gen.
eral legislation to prohibit a practice
so essentially dishonest and thor
oughly demoralizing. 1t needs no
argument to prove that whatever
interest OF profit accrues on the
deposit of public moneys rightly
belongs to the city or State to which the
money belongs. So far as the ethics of
the case is concerned. the appropriation
by public official of the interest on
public money does not differ a particle
from the appropriation of principal. The
fact that the practice is general does not
make it any the less vicious; indeed,
that is simply a strong argument in
favor of reforming it altogether. The
receiving and appropriating by public
official of interest on public funds should
be placed on the same footing as specu-
lating with such funds, or even embez-
cling them. For what is embezzlement
but the conversion to ones own use of
money which belongs to the city or
interest on public money belong?
The whole business is utterly wrong
and rotten. 1t is not only species of
public robbery, but it is demoralizing to
banks and to public and private morals.
The example of public officials is infec-
tious, and the custodians of other large
deposits and trust funds Justify them
selves in appropriating the interest
thereon by the secret assurance that
.they all do it." And why mott When
State, county and city treasurers all
over the land continue the dishonest
practice of appropriating interest on
public funds, and when it is winked at
or cOndoned by both political parties,
why should not other persons in fiduci-
airy positions or controlling large de-
posits not belonging to them quiet their
cOnsciences in appropriating the inter-
est thereon by reference to the example
of public officials7
Some of the States have attempted to
abolish the evil, and, as usual, Massa-
chusetts has the best law on the subject.
1t requires public funds to be deposited
in national banks and the interest there
on to be paid to the public treasury.
A number of the Massachusetts cities
put up their deposits annually to the
highest bidder, requiring security. In
this way Lowell receives SIC per cent,
HOlyoke 4l2 per cent. New Bedford 3
per cent, and so on. Every State ought
to have a law substantially like this.
No State or city treasurer should be per-
mitted to profit to the amount of single
dollar from public funds, either by spec
ulating with them, lOaning them out at
interest or receiving interest on de-
pOsits in banks. The absence of strin.
gent legislation on the subject has been
the cause of numerous financial scan
dals. The remedy is to offer public
money on deposit to the bank which
will both give security and pay interest,
the bank offering the highest rate to re-
ceive the deposit and all interest to go
into the treasury.