Capital journal. (Salem, Or.) 1919-1980, 1920-03-06
NyEsTTGATION IN ORDER.

INVESTIGATION IN URDEh
THE PORTLAND TELEGRAM charges that State Treasurer
Ho has invested the trust funds of the Segregated Accident
Fund from which paid the aues and benefits OF crippled
and injured employees by the State Industrial Accident Comm
son in questionable securities inflated prices and permitted
cessve commissions the bonding house of Morris Bros nc
through whom nearly all bond transactions have been made the
past year.
In support of its charges the transactions involving the
chase bonds the boom towns of Warnton and Reedspo
are recited in detail
city of Warrenton per bonds of value of S242OO0
paying premium of $98 per $780, making investment yield
ling Ia per cent Morris Bros nc had purchased the entire
issue below cleaning up Approximately $4,000 on the trans
action 32 commission than the ordinary bond house
charges cent the transaction Furthermore the total
bonded indebtedness of Warenon totals $53500 an asses
sed valuation of S222A4 Of the money paid by the state
S3 900 went into private the purchase of 100
land Warrenon The validity the bond issue has been
tackled in the federal court by the Spokane Portland and Seattle
railway and is admitted that another city election necessary
to correct techncalties to validate the issue.
The is also alleged to have purchased 100000 of
the six per cent bond issue of Reedspo town in of
creation the lower Umpqa paying to Morris Bros
nc price yield Ia cent interest the state The bonds
purchased by the state two weeks before they voted
issued They sold by Reedpor to Morris for 929O cents
the dollar who without advancing dollar turned them to
the state for $108 18 profit of 1904 cent The Reeds
port bonds purchased the state treasurer October g. the
bond election to authorize their issuance held Nov TO- two
weeks later the bonds dated November and delivered
December "a.
The brokerage commission on bonds runs from 8 per
12 per with banks and bonding houses and
per cent the customary maxmumbut Morris Bros cleaned
87230 these above the customary maximum
AS matter of fact the state being large purchas
of bonds bid directly issue deemed desirable has
done frequently in the past and does not need exhor
btant commissions high premiums Any of the cities whose
issues held would have been glad to sell direct to the state
par instead of selling to bond houses far below par.
These bond issues highly recommended by Morris Bros
Inc desirable investments and the purchases made states
the Telegram through Joseph Richardson deputy state treas
who entrusted by State Treasurer Hoff with bond trans
actions and whoce advice governed the treasurer.
The state not be the loser in these and similar ransac
os and the bonds may prove all that interested parties claim
but boom town securities do not sell at premium and not
gared the safest nyestmentno the character of invest
necessary safeguard the funds upon which the manned
and crippled depend Nor is the the purchases made
very satisfactory the public In the desire secure higher
interest rate it apparent that the value of the security
given scant consideration.
State Treasurer Hof whose integrity and intentions are
above question: but whose financial questioned
should at demand full investigation of the bond purchases
made by his office order to bring out all the facfo only
side of the subject has been heard he not the
should order thorough Investigation of the investments of state
funds by those best qualified to make them
The incident reveals weakness the state law and the
necessity for change Investments of state funds should not
be left to the judgment of any for matter how
servative that be- he make costly mistake
tulary when details left political years
all state funds deposited bank and when that
bank failed necessary from the bondsmen To
guard against such contingencies investment of funds
should be subject the approval either board created for the
purpose of the board of control
The Telegram given wild vicious attacks
upon public officials founded upon suspicion and malice and al
desire to attract aentohence its assertions taken with
grain of salt Investigation will whether is another
of sensational journalism mingled with bondhouse jealousy and
poitics-and the public is entitled to learn the truth