Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1911-03-28
OVERTURN THE
SCHOOL SYSTEM
CONTINUED from FRS, rase.)

CONTINUED from First Page.)
gate approximately 500, 900. No sales
were made by Mr.. Stokes in his own
name during those years, but com
meneing in 1908 Jackson & Co. disap-
pear from the list of vendors, n
Howard Stokes appeared. If Jackson
G. Co. had been a well-known bond
house, and If it were the custom for
banks to- repeatedly make sales to the
trustees their suspicion would probably
not be excited by the fact that so many
sales We're effected by them. AS, how
ever, Jackson & Co.'S existence seems
to correspond with the three years,
1905, 1906 and 1907, and as it was not
usual for banks to make repeated sales
to the trustees, it would seem as
though they should have made some
inquiries. The fact is that a party in
interest in such sales was a brother of
one of the trustees. The governor of
the State Is always a member of the
trustees Of the State school fund, to-
gether with the state treasurer and
State comptroller"
Brokers Made 100000.
The report of the committee further
states that during the years 1908. 1903
n 1910 purchases from Grant & Co.
n from third parties of bonds, In
which the committee believes Howard
Stokes had some interest, bring the to-
tai purchases from these two sources
for the six years commencing with
1906 and ending with 1910 to at least
$1,000. 600. 1t has not been possible to
ascertain the profit made by the
brokers, but from such figures as the
committee has been able to ascertain
it estimates the profits were at least
5000 The report further says
While we regret to say it, we believe
that the trustees during the last six
years have not exercised that care and
caution which the ordinary prudent
business man would In the manage
ment and investment of his own funds.
Methods which lend themselves to
favoritism, if people are inclined TO
show undue preference, should be
stopped.
Bank Deposits Criticised.
We find that school moneys have
been deposited in ~banks-with which
trustees have been connected as Of
iiNCio vi SiO1htAOidCAS. ~ 10
and has always been good law that no
man can serve two masters. When a
person is a trustee and at the same
time an official of a bank having a
deposit of any part of the State school
fund, there is a clear conflict between
duty and interest as a trustee; 1t Is
his duty to keep all funds invested and
to lose a. little as possible in the way
- $1,000 ~lE-tnI - t.--lr
it is, to his interest to have balances
as large as possible. We do not say
that any trustee used his position to
promote his own interest or those Of
any bank in which he vas connected.
We do say that no such risk should be
incurred in the future. 1t is recon-
mended that no school money should
be deposited by the State in many bank
in which a trustee of the school fund
is ar officer, director or stakeholder"
should segregnte school Money.
Another recommendation Is that the
law prohibiting the State treasurer to
receive more than 2 per cent. interest
should be repealed and one enacted
prohibiting the treasurer from deposit
ing with any bank funds under his
control exceeding 3S Ia per cent. of its
capital and surplus. School moneys
should be segregated and placed sepa-
rate and apart from State moneys
within FIVE days after their receipt.
The two million four hundred and
seventeen thousand dollars of the rail-
road tax now on deposit in various
banks should be forthwith paid to the
schools. 1t is pointed out that the
cobra1 .7icfpfPtc orc rornna10d RI h0F-
row, usually at 6 per cent, while the
school moneys deposited in banks only
draw 2 per cent. interest, and even this
goes to general State purposes.
The report takes up in detail the
bond issue scandal of a number of
school districts of the State, and par
ticularly the Gutenberg case. 1t says
there has been carelessness. If not
actual dishonesty, connected with some
issues of bonds. Along this line the
recommendation is made that no school
bonds should be sold at private sale
unless they ave been first offered to
the trustees of the schoo fund.
Exposes Graft Opportunities.
The alleged graft in connection with
the deposit of school moneys in various
school districts of the State is CON-
mented upon. The case of West New
York is mentioned particularly. Here
the custodian retained all the interest.
giving as a reason that he could, If he
so desired, keep all funds in his home,
and that If, through keen business
acu.len. he deposited them with a
bank which allowed interest, the fruits
of his sagacity belonged to him. In
Atlantic City a bank was selected as a
depository the president of which was
also vice-president of the board. and
no interest was allowed on balances,
Dealing with the North Bergen land
deals the report says:
THE facts were duly presented to
the Mercer county grand jury. but no
indictment was found. In Hudson
county 1t was openly suggested that
no redress would be found by a re-
sort to criminal proceedings. 1t was
also limited that the political influence,
though of a different complexion of
I How to Make