The Topeka state journal., 1922-12-18
INTO STATE FUND
Interest From Bank Guaranty
Goes to General Revenue.
Only Two Per Cent Goes to Pro-
tect State Banks.
NO LEGAL ACTION EVER TAKEN
Foster Talks 1t Over With At
torney Generals Office.
More Than $4,000 in Interest
i'm Fund, Reports Show.

More than $4,000 in interest from
the state bank guaranty fund have
been placed in the general revenue
fund of the state and used for state
purposes since the guaranty law was
enacted. Under interpretations of
state treasurers, including the pres
ent incumbent, all interest collected
from the fund above 2 per cent has
gone to the state instead of to the
protection of the guaranteed state
banks.
State officials-including not only
the present state treasurer, but also
the state bank commissioner and the
attorney general-have continued the
ancient practice under a construction
OF the law to the effect that the fund
was not entitled to more than the main
inum rate of interest The general
statutes provide that state funds shall
be placed with state repositories at a
rate of interest not less than per
cent. At times during the last four
teen years the state funds have drawn
an average of more than per cent
and has averaged moro than per
cent The guaranty fund, tho, con-
1inued to receive its regular per cent
and the additional money was retained
by the state.
No Legal Action Taken.
Maybe the construction of the law
is correct. Maybe il is wrong. Yet
with a declaration that an additional
assessment was necessary in order to
protect the fund, no legal action was
taken by the state department heads
10 secure a court determination of the
phrase of the law
Frank H Foster, state bank COM
missioner, stated today that he had
talked with some member of the at
torney generals office regarding the
right of the state to retain extra in
terest earned from use of the guar
sured that the state treasurer acted
within his rights. Commissioner Eos
ter had received no formal opinion re-
garding the issue. he said, and was not
entirely clear as TO the member of
the attorney generals staff with whom
he talked
sfNhy wasn't quo warranto pro-
ceedings brought to determine the
rights of the bank participating under
the fund % Foster was asked today.
'-It was because the attorney gen.
erals office said that it wouldn't stick
and that the fund could collect only
the minimum of per cent fixed by
law" was the reply.
Under the law the state treasurer
is custodian of the guaranty fund.
With regular state funds the money
is placed on deposit with various Kan
sas banks and interest rates are paid
on daily balance, -he states general
law provides that daily balance rates
shall not be less than per cent But
for a period of many years the rate
has been greatly in excess of the min
imum-
Provisions of the guaranty act carry
the general statute statement that in
terest returns shall be a minimum of
per cent. The minimum has also
been the maximum in the construc-
rion which various state treasurers
have placed on the law. This inter
probation was placed on the law in
spite of a provision that the state
shall credit this fund r.
terly with its proportionate share of
interest received from state funds"
the treasurer replying on the subse-
quent wording. computed at the
minimum rate of interest provided by
law upon said fund"
Followed Practice of Others.
81 have followed the practice of
other state treasurers," was the state |
ment of E T. Thompson, state treas |
urers whe- asked today regarding the |
excess earnings of the guaranty fund. |
1T costs the state money to handle |
this fund and it can't be expected to |
do the work for nothing"
1t was suggested that $4,000 was |
rather excessive charge for the extra |
bookkeeping and detail work in ham
ding the fund which the legislature |
placed in the department.
81 am not going to argue that" said 4
Thompson The law says the fund /
shall have the minimum interest rate
OF 2 per cent and it has been get
ting it 1 don't care what they do
with the fund. I am just following /
the law and following it the same way 4
other state treasurers have done. If /
anyone wants the money credited to
the guaranty fund all they have to do
As to get an opinion from the attorney |
generals office and it will be changed
in ten minutes"
To Take 1t to Legislature.
State bankers interested in the fund /
contend the guaranty account is en-
titled to every dollar it has earned.
In order TO get it. tho. it may be nee
essary to secure an appropriation from
the legislature. At the same time the
state bankers will ask the legislature
TO clarity the act and make certain
that the fund will receive all the inter-
est earned.
The contention regarding credits due
the guaranty fund is based on inter
pretations of Sec 597, general statutes
1918. 1t reads in part: THE state
treasurer shall credit this fund quar-
terly with its proportionate share of
interest received from state funds.
computed at the minimum rate of in
terest provided by law upon the aver
age daily balance of said fund.-