Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1921-07-21

pears that the treasury OF the state OK
Illinois carries large daily balances and
that during the administration Of Fred
E. Sterling these balances have ranged
from S2O,O000O0 to $50 100000 during the
administrations Of Len Small and Fred
| E. Sterling as treasurers of the State of
| Illinois, the law then in force In this
! State requiring the State treasurer to de-
| posit all moneys received by him on ac-
count of the State within FIVE days after
receiving same in such banks in the
cities of the State as In the opinion Of
the treasurer were secure and which
paid the highest rate of interest to the
! State for such deposits.
eve find that both the letter and spirit
of that law was violated. Instead OF
/ loanlng the State moneys to all secure
! banks Of the State, without discrimina-
! ton, and to such of them which paid the
! highest rate of interest, only a portion
| of that money was loaned in accordance
with the provisions of the statute. For
the purpose of circumventing those
| provisions, an ingenious scheme was de-
| vised and closely adhered to.
HOW FUNDS
WERE HANDLED.
Beginning with the administration of
! former Treasurer Small, the daily bal
snces Of the State treasury were carried
one denom1nated as the vault fund and
the other as the safe fund The vault
fund represented the aggregate loans
made to legitimate banking institutions
| throughout the State and was uniformly
less In amount than the safe fund.
"The so-called safe fund represented
loans made to the so-called Grant Park
bank which was formerly a private
| banking institution, but which abso-
lutely ceased to function as a bank after
1908. Although this purported bank was
purpOrted to be owned by a single indi-
viduaI, and did not transact any banking
business whatsoever and had no de-
positor other than the State of Illinois,
yet it was given huge deposits of public
moneys by two former State treasurers,
Messrs, Small and Sterling.
The average deposits Of State moneys
carried by this purported bank were
/ 100000. The evidence shows money
was taken from the State treasury gen
/ orally in lots of $4,000 and deposited in
/ the so-caled Grant Park bank, which
thereupon issued and delivered to the
! State treasurer certificates Of deposit for
the amounts received, but without any
collateral security. In other words, the
only evidence of Indebtedness and the
only security held by the treasurer for
| loans aggregating 100000 were paper
Obligations Of a fictitious bank.
1.-The moneys he received were used
in purchasing at a discount short time
notes issued by Swift & Co. and Armour
& Co, two large corporations engaged
l in the packing business in Chicago.
These transactions netted the purchas-
ers Of the notes large profits. II any
portion OF the profits so realized was
paid into the State treasury it vas less
than ? per cent. The evidence shows that
most OF the banks receiving public
moneys Paid into the State treasury in
terest at the rate OF 3 per cent per
annum, but that the aggregate interest
paid into the State treasury on all pub
lie funds during the administrations Of
Messrs, Small and Sterling was less than
! . per cent per annum.
RECORDS REVEAL
THE SYSTEM.
The records Of treasurer's office for
July, 70, 1919. illustrate the manner in
which the public funds have been han
died. On that day the vault fund is
debited with S7.977.jOO of which sum
! $4,977,0O0 was deposited in approx
mately 300 banks throughout the State
and 100000 in a private banking in
stitution, while the safe fund was
debited with $4,000 900.
The activities OF the State govern
ment have grown tremendously during
the last few years. Each Legislature
adds to the supervisory duties of the
State, and as a result of these regulatory
laws the annual income of the State is
being constantly augmented One or
two laws alone have added millions of
dollars to the receipts Of the State
The Legislature OF this State has I'M
limited investigating powers. We, there
fore, recommend that it institute an ex-
haustlve investigation Of the whole sub
ject OF the handling of public funds for
the tW Ofold purpose Of determining u
official delinquency. if any, and t2l what
legislation. if any, should be enacted to
protect the interests Of the State and to
put an end forever to the traffic in pub
lie funds.
We desire to record publicly our
commendatiOn of the attitude of the
present State treasurer Of Illinois. Ed
ward E. Miller. who appeared before US
with the records of his office in answer
TO q subpoena duces tecum. We were
greatly impressed with the fact that his
testimony was free from malice or bias
toward any single individual. His tes-
timony revealed not only an intimate
knowledge of the affairs of his office,
but also a proper conception of his re-
spOlsibilities and duties.
We request the court to permit us co
remain in session for the purpose of fur
Their Investigation.
Respectfully submitted,
ID. A. BRIAN, Foreman"