Belding banner. (Belding, Mich.) 1889-1918, 1908-03-19

have felt IL necessary 10 make sure
that the bonds were good for the
amounts named In them. without re-
gard 10 their sufiiciency 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 <
does not seem 10 have been consid-
cred necessary part or the cxamina-
ton. that the character and standing
OF tho depository hank be taken into
consideration, or that the amount Of
the security tafen from them by the
treasurer should be scrutinized. I'm
doubtedly the examining officers be-
lieved they were performing their fun
duty, but the consequences or the lin
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 it's principal stock
holders. The ordinary seposits or 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-
vcncy of the bank in December. 1907,
the amount OF the state deposit stead
lily increased until when IL closed IL
had reached the sum OF s6S5,000 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 cXces-
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,
IL was found that the state treasurer
himself had personally borrowed or
its funds, the amount of S250.000. and
that his Indebtedness 10 the bank, to-
gether with the indebtedness Of mem
bers of his family and OF the GlaZier
Stove Co. OF which lie was president,
amounted to more than $3S00 600.
State moneys deposited in the
bank are still considered by the law
as moneys in the treasury. Ii seems
to us that the law requiring monthly
examinations OF the money in the
treasury should be construed to cover
public moneys OH 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
[ no ~ fol a no
tinized and taken into careful consid-
Grafton, and we see no reason why in
such examination the data in the Of
fee 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
I his own personal use, would ever have
/ been permitted.
I And in this connection, we feel
bound to call attention 10 the impro-
| priety OF the deposit OF state money
in any bank wherein any state official
/ is stakeholder. He certainly in such
cases has 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 III
4 the history of the Chelsea Savings
4 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 a year prior
/ to its failure il 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.
| situations.
we are advised that the statute
gives the commissioner wide discre-
| ton in such matters. but why this
bank should have been permitted To
20 on in its Illegal course until more
/ than one-thrd of its assets had been
withdrawn by one man and his in
stitutions. we to not understand This
certainly is not fulfilling the functions
for which the banking department was
established
The fault, however, did not, W.
are bound TO say, lay with the exam
iners, 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
tho other class the deposits are more
stable. This has led to distinction in
the rate OF interest required, open ac-
count banks paying Ia per cent, while
I the other banks pay "a per cent and
\ VIC cannot help but notice that upon
4 Mr.. Glaciers assumption OF the duties
Of state treasurer, the ST. Clair County
Savings bank. with which the then
commissioners 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 its rate of interest
reduced accordingly
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