Capital journal. (Salem, Or.) 1919-1980, 1920-05-08
Grand Jury
PassesBuck
HoffCa
CONTINUED from page One)


make the fact known and give all OF
is agencies. or the holder Of obliga-
tions Of its agencies. an opportunity
to submit their securities 10 the state
for investment"
That the system to which the grand
jury refers in its report is one OF long
standing is indicated in two para
graphs thereof. One of these con-
dennis ''the system that has obtain
ed in the office of the state treasurer
for these many years Of making ad-
vances on salaries and claims against
the state before the same have been
audited by the auditing officers OF
the state. namely the secretary of
state" The other directs particular
attention to "the auditors criticism
of the bookkeeping method used in
the state treasurer's office for num-
Der of years past: likewise to the aud
itors criticism of the method of keep
ing the record of collection Of inher-
itance taxes in the treasurer's office
for a similar period
The most flagrant example OF ex-
cesslve profits paid by State Treasur-
er Hoff to Morris Brothers in the
purchase Of municipal bonds is point
ed out in the report as evidenced In
the sale of 100000 water bonds Of
Reedsport TO the state treasurer, 'the
bonds that were purchased from the
thriving little town Of Reedsport and
sold TO the state at the enormous
gross profit OF s16.n1S.9O."
we might remark" the report
states that this is an impressive IL
lustration of the cost of doing busl-
ness through a middleman. The state
of Oregon. In purchasing the bonds
OF one Of its own municipalities. per-
mist middleman 10 exact a gross
profit Of $16,0l9,90, a condition that
should not and must not longer ex-
list"
The investigation developed the |
fact that bonds were often paid for |
delivery thereof; that at the time OF |
the investigation all sums paid for |
undellvered bonds were secured with |
collateral, the report states, adding:
'The records further reveal that |
bonds which We're not yet In existence
had been sold by Morris Bros Inc, |
to the state treasurer at an exhorbl- |
tant profit and payments In fun made |
thereon by the state treasurer. II is |
claimed, however, that delivery Of |
the bonds to the state treasurer was
secured by bonds deposited as coll
lateral"
The apparent right given Morris
Bros, as evidenced by correspond
enee introduced during the probe. to
withdraw securities sold to the state
Is severely criticized in the report
which states that some OF ,hese bonds
We're offered for sale by Morris bros.
while they were Yet held by the state /
treasurer, "srhere should be no |
strings upon any bonds purchased !
by the state Of Oregon" the report
declares
The apparent partially of the state
treasury department toward Morris
Brothers Is explained in the state
ment of j. G. Richardson, deputy |
state treasurer embodied In the re-
port to the effect that by a special
with the Portland bond |
brokers the state treasury had invest
ed some 100000 of industrial acci-
dent funds in securities through this
firm with the understanding that |
they could be resold to the same firm
AZ the purchase price at any time the
money might be needed, the state to
draw interest on the bonds -at the
rate of four percent a var This. Mr..
Richardson's statement explains, was
regarded IA being much more add
arrangement, so far as
he state is concerned, than the pre-
elous policy OF the department which
this huge sum on deposit
n bankA az only two per cent inter-
est.
Gideon Stols foreman Of the In
lulsitoral body In presenting the re-
port intimated that the report was
not altogether final and that the jury
might make further Investigations in
% the conduct of the department
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