The Washington herald., 1910-01-02
FIVE BILLION BONDS
Held by Treasury as Surety
for Employees.
COMPANIES GET $1,OOO,OOO
Concerns Enter Protest Against the
CheaPneSs of Premiums. but Gov
eminent Officials Remain Firm.
Collection of Losses Is Very EX-
pensive PrOcess-Better Way.

Five billions Of dollars is the amount OF
security demanded by the government
from its officers and employees who have
the handling of its money: 100000 is the
amount paid by the officers and employees
to bonding companies for going on their
bonds; $i00.040. or 10 per cent Of the pre-
miums paid, is the amount the bonding
companies have been called on to pay 10
the government for losses through the
delinquency of its agents. Such. in brief.
are the facts ascertained by the Congress
sional joint commission now investigat-
ing the subject.
The investigation was occasioned by an
attempt few months ago by the bond
ing companies to increase their premium
rates from eco TO 500 per cent.
Rule on the bonds.
The matter was partially investigated
at the recent special session. and a law
was enacted insuucting the Secretary Of
the Treasury to accept no bond where
| the premium charged was more than So
per cent IN excess of the rates in force
in 1905.
Since then officers and employees have
found great difficulty in procuring bonds.
/ So heavy was the burden imposed BY the
new rates that the Director Of the Cen
sus went before Congress at its special
! session and asked that the salary OF his
! disbursing officer be increased $500 to en-
able him TO pay the premium, and Con-
gress did give him an increase or 1913 on
that account.
/ The whole bonding business has had a
complete airing before the Congressional
/ commission. For several years there was
no uniform schedule of rates, different
companies charging a different premium.
When Leslie NJ. Shaw was Secretary of
! the Treasury he became dissatisfied with
4 the companies for what ne termed their
recklessness in giving bonds, in many
cases the amount of a single bond being
double the total assets Of the securing
! company. He issued an order that he
would not accept any bond in excess of
/ 1G per cent Of the capital and surplus of
/ the company.
Companies Enter Protest.
/ luiS thittu TOT Il SLIONE protest from
/ the companies, but the Secretary re-
NAMED firm, and his ruling has been fol-
/ lowed by his successors. To relieve them
selves of a part Of the burden imposed
/ by the heavy premium demanded the
| officers and employees required TO give
bond have suggested 10 the Treasury De-
partment an indemnity plan. doing away
entirely with the bonding system.
| As the facts show that the losses are
| only about 10 per cent of the premiums
paid, it is suggested that in lieu Of a
/ bond each bonded officer or employee be
required 20 deposit with the government
a sum equal to % per cent OF the pre-
miums now paid to the companies, and
/ out Of this sum the government shall re-
/ tnburse itself for all losses.
/ When an officer or employe retires from
/ the service the amount SO deposited by
/ him, less his pro rata share Of the losses,
would be returned TO him II is claimed
that this plan Will prove one of actual
economy to the government, as the col
lection OF losses has hitherto been very
expensive. It IS said the Post-office De-
partment recently expended $4,000 to re-
cover $4,000 losses.