The Columbian. [volume] (Bloomsburg, Pa.) 1866-1910, 1898-10-13

These are the balances at the end of
each fiscal year. The monthly balances
are approximately the same. No money
is kept in the treasury. 1t is all in the
| banks. Here we have, therefore, an
average of about $5,000,000 constantly
in the favored fiscal institutions. This
is so large a proportion Of the total re-
sources of many of them that financiers
say sudden withdrawal of the whole
line would create something like a
panic. Indeed, that reason has more
than once been put forward to stay re-
forms intended to prevent the carrying
| of such balances, by cutting down taxes
when the balances have been real, or
requiring that the money be paid out
when they are manufactured. When
banks are without adequate money re-
sources of their own, depositing with
them ceases to be safe.
1t is notorious that the machine has
been in large part maintained from in
terest privately paid on the deposits
to its leaders. Smedley Darlington, of
the collapsed West Chester bank open
ly admits that he paid such interest,
and glories in 1t.
Responding most reluctantly to popu-
lar protests against the outrage and de-
mand that it cease, the legislature of
1897 passed the act requiring the pay
ment of 112 and per cent interest to
the state.
The state treasurer selects the de-
positories with the approval of the
board of revenue commissioners. The
members Of this board are the auditor
general (Quay machinite) the state
treasurer (Quay machinite) and the sec
retary of the commonwealth (the head
of the Martin machine). And since
most of the repositories are with the
Quay machine, It will be seen that that
machine has everything in connection
with this business nicely within its own
control.
The best possible proof that this mat
ter of the state balances has been a
source of unusual profit to the favored
banks, and that they have been willing
contributors to the support of the ma
chine, in return for the favor of the
deposits. abides in the fact that no
word of open protest has been made
against the new law (Which went into
operation on the first Monday in May of
this year, 1899 and that there is almost
as urgent call on their part, to be per-
mitted to continue as repositories as
ever Possibly the law will curtail to
some extent the machine gain there
from, and that of the individual bene-
ficiaries. But the money is worth to
the banks that carry 1t more than the
IL and 2 per cent they are required
to pay for its use, and 1t may be safely
assumed that the machine leaders are
not unaware thereof. There are stories
current in Harrisburg and elsewhere
fhaf ho MI hou
acting as Intermediates to secure de-
posits, sums in excess of IL and Q per
cent. And, while 1t might be some
what difficult to legally prove these al
legations, no one familiar with the do
ings ION the Hill" of recent years can
be found to doubt their accuracy.
1t Is the boast of the machine lead
ers that the state has never been to any
serious extent a loser through the fall
ure of banks carrying state deposits.
Where such failures have occurred the
loss is alleged to have fallen upon the
treasurers and their bondsmen, or upon
the wealthy machine politicians who
have afterwards felt 1t incumbent upon
them, or been in effect compelled, to
make the treasurers and bondsmen
good. The act of 1897 inaugurates a
new order of things in this connection.
Section of the act provides that the
state treasurer "shall not be held perso-
nally liable for any moneys that may
be lost by reason of the failure or in
| solvency of any bank, banking institu-
tion or trust company, selected as
| aforesaid" Hereafter therefore, burst
| ed banks, IL there be insufficiency in
| the banks bonds or default in their
bondsmen, will mulct the treasury and
| the people instead of the treasurers.
The act referred to is a concession to
| popular opinion created largely by
Democratic platforms Democratic
1 newspapers and Democratic stump ora
| tors, but 1t is far from being as safe
| for and profitable to the state as was
| an act originating with the Democrats
| in 1888, and passed by the legislature
| of that year and approved by the then
| governor, Robert e. Pattison. That act
was known as the Humes' sinking fund
act, and provided that when state bonds
| were not to be had the surplus moneys
in the sinking fund should be invested
in United States bonds. 1t was the Gus
tom in those days to carry the big end
of the balances in the sinking fund,
presumably because, when moneys go
into that fund, there is no legal way of
getting them out again, except to pay
the states bonded debt, and having
large sums there insured large sums for
distribution among the banks. There
were about $2,500,00O then in the sink
| ing fund, and not quite as much in the
general fund. Senator Humes Demo
craft the father of the act, pointed out
that 100000 of the sinking fund ball
ance. which was not needed to take up
bonds, could be utilized to save the state
during the term the bonds then out
standing mad to run from one to three
and a half millions. The bill was fierce
ly fought by the retainers of the Re-
publican machine in both houses, and
did not pass the lower body until the
night before the adjournment, when II
did not have single vote to spare.
However, as already stated, 1t was
signed by Governor Pattison and be-
i came law. For eight years 1t remain