Los Angeles herald., 1907-09-06
DEPOSIT is
WITHIN LA w
NEW RULING GIVES CITY TREAS
URER POWER
CAN PLACE. MUNICIPAL FUNDS
ANYWHERE IN STATE
Los Angeles Benefited by New condi-
tions, as Per Cent Is Derived
from City Moneys De-
posted

The practical workings Of the new law
which allows city treasurers to deposit
funds in banks paying 2h per cent In
terest where formerly they were required
to keep these funds in their own vaults,
is beginning to be felt. 1t was thought
this law would work to the benefit of city
banks which would receive the money on
deposit, and would benefit the city treas
urer by relieving him of the embarrass-
ment and danger of holding the fund in
the city vaults
Considerable surprise was manifested
when the list of deposits made by the city
treasurer was published and it was no
ticed $25O0 of the money had been placed
with bank in Ocean Park.
When questioned last night City Attor-
ney Hewitt said the new state law per-
mitted the treasurer to place the money
in any licensed national bank in the state
This being the case the treasurer may
place the city funds in banks outside the
city or county. 1t is probable this wide
discretionary power would not be exer-
cised by any treasurer having the welfare
of the city at heart and desiring to pat
ronize local institutions and keep the city
money in circulation among local banks
But the present instance demonstrates
that there Is a loophole in the new law
for such abuse.
The benefit of the new law is unques-
toned. The city is benefited by the in
terest paid by the banks and the treasurer
is not bothered with storing the funds.
The deposit of a small sum of $500 in an
Ocean Park bank by the treasurer is in
no way an abuse of his power The incl
dent merely serves to illustrate weak
ness in the law which openeS a loophole
by which local banks could be deprived
of the city's funds. which could be de-
posted with outside banking institutions.
Complaint has been made at the city
hall that s25OO of the city's funds is on de-
posit at Ocean Park, in bank outside of
Los Angeles.
Deposits Are Legal
This and hundreds of thousands of dol
lars of miscellaneous funds are on deposit
in accordance with the new state law
which requires the banks to furnish ample
security and to pay per cent interest for
city money. Formerly the treasurer kept
this money on hand without getting in
terest for 1t.
The balances in the Los Angeles banks
where city funds are deposited shows the
following amounts of municipal money de-
posted. with the date of the last bal
ance, viz:
Central $4,000, April L; Los Angeles
Trust company. $4,000, July 10; First Ma
tional s145,OOO. April 1; California Savings,
$4,000, April 4; American Savings, $4,000,
April 1; State Bank and Trust company,
$4,000, June z; Equitable Savings, $4,000,
July Z: Metropolitan Bank and Trust COM
pany, $4,000, April i; Farmers and Mer-
chants, $25O.O0O, July 10; National of Cali
fornia, 100000, April IS; State Trust COM
pany, $4,000, August ID; American Ma
tional, s2OoOOO, April 1; Merchants Ma
tional 100000. July 10; First National of
Ocean Park, $500, June %.
City Treasurer Hance said the Ocean
Park bank deposit was a loan of city
funds such as other amounts are out
standing from the city treasurer, and the
city gets the regular per cent rate for it.
1--WE recently got $1,000 interest for our
deposits for the first quarter" said Capt.
Hance yesterday, "but the next quarter
the amount will be less as we have let the
total run down some because of the city's
requirements"
City Attorney Hewitt said last night
that the state law permitted the treasurer
to put the money in any regular licensed
national bank in the state the law also
making specific provisions about security.