The Yale expositor., 1908-03-20

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gard to their sufficiency as security
for the money deposited.
The other section OF the statute
requiring monthly examinations of the
treasurer's accounts and of the
moneys in the treasury, seems always
to have been complied with but Il
does not seem to have been consid-
cred a necessary part of the examina-
ton, that the character and standing
of the depository bank be taken into
consideration, or that the amount of
the security taken from them by the
treasurer should be scrutinized. I'm
doubtedly the examining officers be-
lieved they were performing their full
duty. but the consequences of the linn
tied view of their duty taken by them
is shown by the outcome.
The Chelsea Savings bank was a
bank with but 100000 capital. The
state treasurer himself was its presi-
dent and one of its principal stock
holders. The ordinary deposits of this
bank seem to have amounted to some
thing less than 100000, yet as early
as April, 1906, the states money
placed in this bank had reached the
sum of $4S0,000 and upwards. From
, that time on until the declared insol-
vency of the bank in December, 1907,
the amount of the state deposit stead
| lily increased until when 1t closed it
had reached the sum of $685., 900 and
more. The security, however, given
by the bank never exceeded the sum
of 100000, and all of the time il could
have been found by an examination
of the records in the Office of the
commissioner of banking. that this
bank was violating the law by excess
sive loans to Mr. Glazier himself, to
his family and to institutions with
which he was connected. When the
bank was closed on order Of the court
it was found that the state treasurer
himself had personally borrowed of
its funds, the amount of $3.50 900, and
that his Indebtedness to the bank, to-
gether with the Indebtedness of mem
bers of his family and of the Glazier
Stove Co. of which he was president,
amounted to more than s3S0,000
State moneys deposited in the
bank are still considered by the law
as moneys in the treasury. 1t seems
to us that the law requiring monthly
examinations of the money in the
public moneys on deposit. and If such
examinations are to be of value and
are to operate as a protection of the
state funds, the character of the banks,
their obeyance TO the general banking
law, the amounts of the deposit and
the security taken should all be scru-
tiniZed and taken into careful consid-
Grafton, and we see no reason why in
such examination the data in the Of
flee of the commissioner OF banking
should not be called into use. Had this
course been taken, we cannot believe
that such excessive deposits in the
treasurer's own bank, and largely for
his own personal use, would ever have
been permitted.
And in this connection, we feel
bound to call attention to the impro-
priety of the deposit of state money
in any bank wherein any state official
is stakeholder. He certainly in such
cases has a direct pecuniary interest
in the deposit, and this seems to be
the result which the law intends to
avoid. The dangerous consequences of
so depositing money to the treasurer's
personal benefit is distinctly shown in
the history of the Chelsea Savings
bank.
Nor do we think that the course
Of the late commissioner of banking
in regard to this bank should escape
criticism. For more than year prior
to its failure it was known TO this of
ficer that the Chelsea Savings bank
was violating the law in the amount
OF its loans to Mr. Glazier and his in.
stitutions
I'VE are advised that the statute
gives the commissioner wide discre-
tion in such matters, but why this
bank should have been permitted to
go on in its illegal course until more
than one-third of its assets had been
withdrawn by one man and his in
stitutions, we do not understand. This |
certainly is not fulfilling the functions
for which the banking department was
established.
THE fault, however, did not, We
are bound to say, lay with the exam
liners, for the true. condition of the |
bank from time to time appears en-
phatically In their reports. but in the !
face of these examinations, we cannot |
find in the records of the department
so much as one word of criticism by |
the late commissioner regarding the |
Illegal course of the bank.
Banks used as repositories for |
state funds are divided into two |
classes; one class is called open ac- |
count banks. from which the treasurer |
is continually Withdrawing funds for |
the daily needs of the department; in |
the other class the deposits are more |
stable. This has led to a distinction in |
the rate of interest required. open ac- |
count banks paying Ia per cent, while |
the other banks pay "a per cent and |
we cannot help but notice that upon |
Mr.. Glaciers assumption of the duties |
of state treasurer, the ST. Clair County |
Savings bank, with which the then |
commissioner of banking had been
connected before his appointment to
such office, and with which he again
became connected upon retiring there
from, became classified as an open
account bank, and it's rate OF interest
reduced accordingly.
But we cannot find that this bank
was ever used practically as an open
account bank, only three checks hav.
ing been drawn upon it by the state