The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1930-10-14
5000 OFFICIALS NOW
CARRIED ON ROLL OF
SURETY DEPARTMENT
Manager TuneII in Annual Re-
port Favors Investing in
n. D. Securities
BIG LOSS IN FAILED BANKS
Of $150,97o.73 Net, Books
Show $o2,865 Vanished in
That Way, $72,124 Defaults

That Way, $72,124 Defaults
Gross income to the state bonding
fund during it's 12-year period of
operation totals $578, 679. IS, according
to a report made by F. E. Tunell,
manager of the fund, to S A. Olsness,
commissioner of insurance.
The report, as Of December 81, 1929,
shows the total assets or saving to the
fund to be 1914. 731.70. OF this sum
$276, 1863. so constitutes the surplus,
and $37, 1920 a reserve for unearned
premiums.
This saving to the fund amounts
to $40 per cent of the gross income"
Mr.. Tunell said in his report. In
deed this must be acknowledged as a
remarkable showing when II con-
siders the financial universities which
the fund has outlived."
The gross income is derived from
collections of premiums on bonds of
public officials and employees aided
by interest on the accumulated sur
plus. Premiums are charged at the
rate of Is cents per 500 in bonds per
year, or $3.50 for each 81, 1000 bond
for n year, the report says.
Treasurer Carries Fund
Officials bonded by the state bondr
ing fund now number approximately
5000, the largest percentage of the
bonds in force ranging in amounts
from $500 to IS 5000, according to the
report.
Collections are made by the bond
ing department and deposited with
the state treasurer, who carries the
funds on deposit with the Bank of
North Dakota. The fund, with the
current expenses and payment of
losses, is placed ON time deposit at the
rate of 3 per cent per year, the report
states.
THE interest income now totals
$49, 882.11 received and $3,O69.87 &C.
crued," Mr.. Tunell says in the re-
port. The interest income, he said,
is constantly increasing and in 1929
exceeded $4,000.
Your manager believes" Mr..
Tunell's comment continues, that
j ouL O1OO VI IN 4uAAO Sl1Ou1O NC III
vested in bonds of the state of North
Dakota, thereby increasing the inter-
est income several thousand dollars
each year and in no way j~eopardizing
the security of the fund"
Banks and Losses
The largest source of expense
shown in the report are losses, which
total s150,979.73.
This sum represents the net
losses. %recoveries having been made
to the amount of 1884 SO, thus re-
ducing the amount of net losses" the
report states.
1.-The total losses paid are in the
sum of $176,934.36. OF this sun ST.
124.69 is chargeable to defaults,
$6,924.28 to negligence and $92, 1885,
80 to funds lost in closed banks.
During the early years of the de-
partment, when banks were closing in
rapid succession, an enormous num-
Der of the claims were presented on
account of public funds tied up in
closed banks. For the past few years,
the department has required strict
conformity with the depository law,
and with the comparatively few
number of bank failures recently, it
is expected that the fund will not suf-
Ter any large amount of losses from
this source in the future.
There have been many claims pre-
sented to the department on account
OF defaults and entertainments and
1t appears that a nor thorough sys-
tenn OF auditing the accounts of trea-
surers should be provided. Some of
the shortages run for a number of
years before being discovered. During
the past few years, many prosecutions
have been made and many prison SEN
fences imposed on account of embez-
elements by public officials. The
cure for this class of crime seems to
lie in direction of more complete &C.
counting. The electors of the various
subdivisions could do much to rem
edy the evil by choosing men to
handle the public funds who are
known to be financially responsible.
Claims Too Costly
Several claims are now pending on
embezzlement charges which have not
yet been fully investigated, and it
appears that the fund will suffer sew
eral thousand dollars losses on &C
count of such claims.
Disputes arising under claims Of
ten necessitate several inspections and
Investigations and in many cases liti-
cation is necessary in order to deter
mine the liability of the fund. These
Investigations and law suits require
considerable expense, which Is un-
avoidable under the many claims.
This expense is charged to operating
but is directly caused by claims for
losses and might be properly charged
to losses. The expense of inspections,
Investigations and legal defenses dur
ing the period of operation amounts
to $17.383.04, but the savings to the
fund through such defenses amount
to many times the cost.
Large risks in excess of $25, 900 are
re-inSured with the Northern and
Dakota Trust company of Fargo. The
fund assumes the first $25 900 of the
risk and re-insures the balance. Dur
ing the period of operation the fund
a paid the sum Of $40, $40 rs, and it
Is significant to note that the re-
insuring company has not been called
upon to pay a single claim under this
arrangement. The cost of this re-
insurance is So per 81, 1000 per
and the premium charge appears to
be excessive for the hazard involved.
1.-The total operating cost to the de-
partment for the period ending De-
cember 81, 1929, is $64, 427 g."
Nh npn~uk $780, a. "
operating expense of the fund is ll.2
per cent OF the gross income, which
is in excess Of the maximum of 10 per