The record-union., 1896-02-27
BANKING ON PUBLIC FUNDS.

Il
The dispatches announce that ]. w.
McCauley, ex-City Treasurer of Taco
ma, has been sent to the penitentiary
for four years for criminal tampering
with city funds. He drew interest for
placed by him in the defunct Columbia
National Bank This banking fraud
collapsed, along with a lot Of others,
all of which held city funds on deposit,
whereby the city and county were heavy
losers. Indeed, some of the banks had
little or no other fund upon which to
do business than city or county money,
and at least two, we believe, were or
ganized for the sole purpose of getting
their corrupt hands into the public
purse. Boggs, another ex-City Treas
urer Of Tacoma, was some weeks ago
sentenced for similar crime to serve
six years in State Prison.
These criminal sentences recall the
story of the wrecking of public treas
uries in Tacoma through the damnable
practice of placing official funds in
banks which the institutions operated
upon as usable capital. The Attorney
General of this State has decided very
recently that deposit of public funds in
banks by officials who are the custodi-
ans of those funds under the law is an
unlawful practice and is directly for
bidden On the heels of this decision
came the order Of the Bank Commits
sioners forbidding any bank under their
jurisdiction from receiving city or coun-
ty funds on deposit. All these facts
are well remembered by our readers,
since the Record Union" took pains to
emphasize them and draw lessons from
them.
An interesting question now is, How
far is the law being still violated, in
the teeth of the ruling of the Attorney
General and the order of the Bank
Commission" We have reason to be-
lieve that the law is still defied, and that
public funds are still being used as
current capital by banking institutions.
Recently there has developed a move
ment to so operate upon the next Leg
islature as to secure the passage of
laws to permit the transfer of State
and county and city funds to banks. 1t
is worthy of remark that this scheme is
just what safeguards they would throw
about the system are not clearly stated
nor can they be.
However, it is noteworthy that as the
claim is that public money accumula-
tions should not be withheld from circu-
lation, but be used to ease the money
market, therefore it is reasonable to
conclude that the idea is to let out the
public treasures for bankers use, upon
which they may proceed to do bust
ness as capital. and thus put the money
into circulation. Any such scheme is
to be condemned in advance. The the
ory and letter of our laws, State and
municipal, is that the public funds shall
be kept in actual possession by the
Treasurer chosen by the people; that
the identical money paid In shall be
held by such Treasurers and susceptible
OF production to be inspected at any mo-
ment by lawful authority
It is now proposed to reverse this wise
system, approved by ages of expert
ence, and radically upset it. by placing
all public funds at the command of
bankers, that they may use them as
capital upon which to conduct private
business. The specious excuse for this
bold-faced proposition is that it is
harmful to the financial nerves of the
community to withdraw large sums of
money by taxation from general cir
culation and sequester the coin in Off
cial vaults. This sophistry is, in fact,
the one lonesome thing worthy to be
designated argument" that can be or
is advanced by the proponents of the
new idea
The plain, straight-thinking people OF
the day will be apt to ask by what right.
upon what principle. is the claim made
that one class of the community shall
have the use Of the money of all classes,
upon which to prosecute private busi-
ness? Suppose it is granted for mo-
ment that for this use the banks win
pay literally, why should the State, or
a county. or a city. go into competition
with citizens in the money loaning
market, when it has just been demon
strated that there are millions of idle
money in the keeping of the people
awaiting investment and good opportu-