THE
BREVIER LEGISLATIVE REPORTS.
FOURTEENTH VOLUME.
INDIANA LEGISLATURE.
Public Funds Depositories.---Debate in Continuation
HOUSE OF REPRESENTATIVES.
FRIDAY, February 14, 1873.[CONTINUED FROM PAGE 165.]
Mr. Woollen's bill [H. R. 24] for an act to provide designated Depositories for the Public Funds in the several counties, and to provide for the enforcement thereof was taken up in order - the question being on the third reading.
Mr. WILSON of Ripley. Mr. Speaker: The law now makes the State Treasurer responsible for the public funds: and it seems to me that the question here is, whether the people shall leave the man whom they elect for the purpose, as the keeper of the public funds, or whether the public funds shall be transformed and distributed amongst the banks in the several counties. As it appears to us from the country the only pressure for the passage of this bill is in the desire to accommodate some county Treasurers and officers with the privilege of loaning the public funds and making money out of the operation. I do not think the people demand this bill. Is may be demanded by a few moneyed centers.
Mr. RICHAKDSON. This is a bill really in the interest of the bankers and it would lead to competition amongst the bankers as to who shall be treasurer. I do not think it either wisdom or good policy to furnish money for such a purpose. While it may save four to six per cent, to the people, the barikers will realize from it from eight to fifteen per cent. The bankers will receive from it three times as much as the people. The farmer is obliged to pay ten per cent, in advance for his loans from the banks. In my opinion the bill is a movement in the direction of high taxation; and I hope it will not pass.
Mr. LENFESTY. This bill should receive very careful consideration. As the law now stands the officer who is charged with custody of the public funds is an elective officer, and he is required to give sufficient bonds. This bill entirely changes the arrangementit proposes that the Commissioners as well as the Governor, Auditor and Treasurer of State shall be designated as depositors. But it seems to me that the bill is defective as to the requirement of bonds, and that the people might be left without security for their money; for it says: "if in their judgment, the safety of the funds require it, the bank shall give a bond."
Mr. WOOLLEN (interposing.) It requires absolutely that the banks shall give bonds as an individual.
Mr. LENFESTY. Well, that does away with one of the objections which I intended to submit. - But there is this objection to it: It takes the funds out of the hands of the men whom the people of the counties have selected to be their Treasurers and puts them into the hands of bankers or banking associations; and it does not even require that the funds shall be kept in the county. I re- page: 486[View Page 486] gard this as an unwholsome provision. And there is yet another objection.
In many counties of the State they have gone to considerable expen&e to procure suitable vaults for the security of the county funds. Now this bill requires the county Commissioners to designate banks instead of these vaults. I think the men whom we elect for the purpose are better and more reliable as custodians of the public funds than those banks which may be designated. I believe the bill would open a door for corruption; and I do not believe that the county Commissioners should have the discretion to say in this way, that the people have made an unfit selection of treasurer. The law should provide, and it does now provide, that any interest which may accumulate on the public funds shall become a part of them: and when these banks shall realize their ten per cent, on the public funds, what part of these proceeds will belong to the people?
Mr. WALKER. If the House should see proper to vote this bill down; I hope it will be done upon better grounds than upon those confused ideas of gentlemen who have said that it is in the interest of the banks ; but I do not believe it is right to vote the bill down simply because somebody says it is in the interest of the banks. This first question should be determined against the banks before we vote against the bill. But as I understand it, it is not in the interest of the banks, but in the interest of the people. It is found upon that principle of law which governs trustees who hold trust funds for the benefit of third parties. The party must know that the accumulations of interest go with and form a part of the fund; and this bill seeks to carry this principle to the officers of the State and the counties.
Now, it is not known to all, that the accumulations of interest on the public funds do not always follow the fund, but find their way into the pocket of the custodian ? It has come to be a common saying, that a man wants to be State Treasurer in order to grow rich upon the interest proceeds of the State's funds: and the county treasurers in many counties, it is said, receive large bonuses for the county funds committed by them to the banks. Now it should be, that all the county moneys should find their way into the treasury vaults, and there remain: but the history of the State has shown that all the legislation in the world can't lock up these funds and their accumulations in the State's vaults and confine them there. It is even made a penitentiary offense for a treasurer to allow the deposit of a single dollar of the public funds in his custody. That is the law in the State of Ohio, and there is not a county treasurer in the State who follows the letter of that law. And the history of our State shows that the funds of the State are not in the vaults and safes of the State, but in the banks, and the proceeds going in the pockets of the officers.
Now, if we can't keep these public funds in the public vaults, should not their proceeds go with the funds to the credit of the people? But supposing the banks do get profits, does it not come back to you again ? It is drawing interest for you to loan to your banks again. But if you lock it up in your vaults you get no interest.
This bill proceeds upon the assumption that you can't keep it in the vaults; and that the proceeds shall follow the funds. For it is known that even the treasurer loans the school fund in the treasury, and reports no money; and so he shortens the terras of the common schools whilst he is drawing ten per cent interest on it! Under this bill these officers must show by affidavit what every dollar of the fund has accumulated. Is not that a geod provision ? Now, it is said, that whenever the depository is named the bonds of the officer is released to the extent of the deposit: and that is true. But how is it ? No bank can get their funds till they have executed a bond to the satisfaction of the treasurer, the other officers of State and the county Commissioners. But you say that you can't realize more than six per cent. Well, if all the funds belonging to the counties and the State were loaned securely at six per cent. - look at the amount that would be accumulating for the people. I do not believe that the people generally know anything at all of the amount of the accumulations of interest on their county and State funds.
Mr. GIVAN. Does the bill compel the depositories to pay interest ?
Mr. WOOLLEN. Yes. That matter is left with the Commissioners. They must make a contract with the depositories for a certain sum. I do not understand that the bill compels the Commissioners to select depositories, if none can be obtained.
Mr. WILSON of Ripley. Suppose the money is repaid to the custodian, he cannot be released. Whenever monev is loaned in any way by a custodian, he and his bondsmen are liable.
Mr. LENFESTY. Under this hill there is no more money to be kept in the Treasury vaults than what is necessary to do the ordinary business of the office. Now, when there is but one bank in the county, I ask whether the Commissioners are not compelled to direct the treasurer to deposit the public money with such bank, whether it is worth a dime or not?
Mr. WALKER. No sir ; it is not obligatory at all. All this matter is left with the Commissioners. If there is no safe bank in the page: 487[View Page 487]county, they send to the most convenient one. That is the way I understand the provisions of the bill. I have examined the bill myself; and I believe it is carefully drawn.
Mr. WOOLLEN interposed and read the provisions of the bill under discussionfrom the third, fifth, and eighth sections.
Mr. WALKER. That is the way I thought it was : that unless they agree to do so, the provision does not imperatively require the County Commissioners to name a depository. Now, if the House is willing to say that all the accumulations of interest on the public funds shall follow the fund, let it be so. Are not the Commissioners as com-petetent to determine the depositories and their bonds as any party can be? I do not believe that when the State fixes the value of the services of a man in office and pays him for it, I do not believe he should have any perquisites.
Mr. SATTERWHITE. When this bill first came up I was decidedly in favor of it. And if there is any man on this floor whose financial interests demand that this bill should pass, I am that man. But, after studying over it, I think now it is my duty to vote against it.
Mr. WOOLLEN (interposing.) Does the gentleman wish to have it changed?
Mr. SATTERWHITE. Yes. The bill makes it the duty of the county Commissioners to deposit at the county seats, and it makes it the duty of the Governor, Auditor, and Treasurer of State to deposit at Indianapolis. Now, I am in the banking business at Martinsville; and I insist upon this being changed.
Mr. WOOLLEN. Does the gentleman insist that the bank down in Martinsville shall have a part of the State funds?
Mr. SATTERWHITE. Yes: I think the banks throughout the State ought to have the right to call for a portion of the State funds at Indianapolis. But, like the gentleman from Ripley [Mr. Wilson,] I think the State should not go into the banking business: and I am not sent here to legislate for the interest of the First National Bank at Martinsville. What I would prefer is such legislation as would make the taxes collectable half yearly: so making the people their own bankersinstead of their efficers. I have had some experience in this business. The county Commissioners are liable to temptations. They have their friends: and there is no use in denying that they may be corrupted when corrupting influences are brought to bear on them.The banks want the public fundswould be glad for you to deposit the county funds and the State funds. But the Commissioners will come to one of the banks and ask them ; what will you pay for the deposit of these funds. They will reply : we will pay two per cent. - no more. They may go to Martinsville and ask them: and they will say: two per cent. - no more. I tell you plainly sir, that the bankers can and will make rings and control the rate of interest on these funds. Therefore I hope the bill will not pass.
Mr. BRANHAM. I certainly can join the gentleman from Morgan in wishing that this bill may not pass. I suppose a portion of the members of this House can remember the time when the public funds were scattered all over the State. I do not myself remember very particularly as to the State's losses in such cases; but I can recollect the time when we paid here one per cent, for the money borrowed for the pay of members of the Legislature; when at the same time the Treasurer had loaned out the State's money : and the State never got it back again - it was lost.
This bill proceeds upon an incorrect principle. I wish to state the theory I have upon this matter. The legislative action of our State for the last four years cannot be justified upon any sound principle. The correct theory is, that the State shall take from the taxpayers no more money than is absolutely necessary to carry on the government.
The gentleman from Morgan is correct in his statement that there is pending before the Committee on Ways and Means a bill allowing the semi-annual payment of the taxes: and the result of such a statute would be to leave six months longer in the pockets of the tax-payers one-half of the taxes : and it would result in bringing the periods of the collection and paying out of the public funds near the same date - so the taxes would be disbursed - sent back to the people in the shortest time possible. The object is to admit of no heavy working balances either in the State or the county Treasuries. At the proper time, I shall urge it upon the House to adopt this theory.
I want to say also that we carried into the treasury four years ago a surplus of fifteen hundred thousand dollars ; and if that had not been there we would be worse off: that a large amount of money was taken out of that surplus by men that had no business in the treasury. I suppose gentlemen are all conversant with the trouble about the distribution of the school fund, which could not be got. The theory of the law is that it shall be in the State Treasury. I recollect one prominent man switched off six hundred thousand dollars on the side track,placing it where certain parties could get it; and how much trouble we had with a certain banker in this city when the case was pending about the law for the distribution of this six hundred thousand dollars. I recollect page: 488[View Page 488] seeing a banker, living not a hundred miles away, so scared about it that his hair is white yet, perhaps, for fear he could not get the money back. And many others were in his condition.
If I am not misinformed, one lumber-yard in this city had fifty thousand dollars of it; which is more than any one lumber yard ought to have. But now, sir; let us pass that semi-annual tax-paying bill by which the taxpayer will have the discretion to pay in April and November: for all we want is to keep a working balance in the Treasury; and that will not admit of deposits of the public funds for more than three months: and for such temporary deposits no bank will pay more than three per cent. For, if you go to a bank with a certain amount of money and tell them you want to make a deposit on interest(I talk about banks doing a solid business)they will ask you at once: how long are you going to leave it? I know of no bank that would pay anything, or even talk about paying anything on a deposit for thirty or forty days. Then the idea of accumulations of interest from this source is merely idle - visionary. Then there are but two periods in the year at which the banks can afford to pay for money, and at all other times they generally have a surplus: and probably, at the very time the State wants her money, the banks also will want money. All the schools commence in the fall of the year, when that fund must go immediately for their support: and, I ask you, what bank would give you anything for money to be checked out for the payment of our public school teachers? I tell you, sir, there is no sound bank that would pay you a single cent for it.
At the proper time, I shall move to change the title of this bill, so that it will read: "A bill to provide money to enable men to go into banking who have no money of their own:" for that is the plain English of the bill. I tell you, sir, if you designate these depositories you will incommode half the people of the State : and I understand that half the counties have not a good bank in them; and a great many banks are not sound: and no solid bank will give you a dollar of security outside of their corporation for the use of your money. I venture to say, that there is not a bank in the State that would go to any man outside of their bank for security for money that they can't keep more than three months. Then, how much would they pay for it? I know what deposits are worth. One and a half per cent, was all our concern could get for six months. The reason was, that no bank could pay more. But then, here is the necessary result: It's going backward. It seems most singular to me to see the gentleman from Johnson [Mr. Woollen] advocating this bill. Why, Old Hickory opposed its principle: and while I never supported him as a public man, I am willing to ask any man to go back and say whether Old Hickory was not right in this? - in the withdrawal of the government deposits from the old United States bank ? I believe it was one of the grandest things in our history for the manumission of the people from the shackles of concentrated capital.
If there is any one thing, more than another to be feared in the future of this country it is the centraliztion of the money power: and this bill is but a proposition to centralize the money power of the State. But I say to all parties: if they want money to bank upon, let them get it; but so far as my vote is concerned, they shant have it out of the treasury of the State of Indiana. Were this bill to become law and live for six years, before one year these parties would be furnished with capital for banking. That's the object. But now, let us keep these things apart. For if you lend the public money so that the accumulations of interest shall increase the principal - how will it be that your officers can keep the money where they can get it to meet the wants of the treasury every day ?
But now, certainly, so far as the State is concerned, she will have no money which she can afford to loan for the next two years. You will even have to borrow six hundred thousand dollars to carry on the government this year, or let your paper go to protest: and so it will be next year. Then let the banks and the bank men manage their own affairs.
I have heard some gentlemen here say that their counties have lost money by the banks : and I know of one case down south where they have a little bank which they trusted : and while the county did not lose the money tbe officers did. Most counties get along well enough without the banks. And then again; I have not heard of the people anywhere demanding this thing. The demand for this bill comes from those who want the money. But the fair principle is that the tax-payers shall retain their money till tne State needs it; and when the State gets it, send it back again into the course of trade at the earliest moment.
Mr. SHIRLEY. I differ from the gentleman from Jefferson. I advocate this bill as in the interest of the people: and I say to the gentleman that his position is in the interest of the bankers and office holders. And then, as to the public money, if it earns a dollar, it should belong to the people, and not to the public officers. Why, sir, perhaps a hundred millions of the national public funds has furnished a corruption fund to page: 489[View Page 489] control the elections - a fund that has been run in the interest of the bank men! Do you say it is right then, for such men as these to take this money, get the interest on it and put it into their own pockets ?
Mr. RICHARDSON asked if the money used to make the Republican party did not come from these officers ?
Mr. SHIRLEY. I do not know where it came from. I suppose they used a good deal.
Mr. SATTERWHITE. Did not the gentleman from Morgan and Johnson [Mr. Shirley] make the charge against me, that I furnished money to buy the Legislature four years ago:
Mr. SHIRLEY. If the gentleman wants his question answered, I can answer it so that it will tell against him.
The SPEAKER. The Chair rules the question to be out of order.Mr. SHIRLEY. What are the arguments against this bill? The gentleman from Jefferson says it will put the public funds into the hands of the banks, and they will use it. But they are using it now ; yet the gentleman stands here and opposes this bill. But I stand here against these public officers taking this money and using it.
There are county officers not fifty miles away that take their county money, bring it here to Indianapolis, deposit it and pocket the proceeds. But I want to say here another word. The gentleman says: you must not collect the taxes faster than the State wants to use the money, and he even complains that the taxes were put too low two years ago, and he says, therefore we have not now enough money in the treasury. But when you levy taxes, you want to have them paid; and, I don't care what system you adopt, there will be accumulations in the Treasury. But when gentlemen say lock it up, I say that is a wrong policy. For if you aggregate the amount of money that is paid annually into the treasuries of the several States of this Union, you will find that it exceed the amount of the current circulation of the country.
I can't see anything else in the opposition to this bill, but that it is in the interest of the office-holders. Why, sir, we have a law that any officer loaning the public funds shall be treated as a felon: yet they are doing this thing every day : and they make their defiant declarations to this effect: "Although I was guilty of a felony when I loaned this money and got the interest on it, yet, because I have it in my possession, you can't disturb me in that possession."
I can see no reason, sir, why this idle money should not be loaned out, and the accumulations go to the people and become part of the principal. I doubt not that there are county treasurers and some State treasurers or those who would be such, that would be glad to see us voting against this bill; but I say here, that I am more willing to trust money in the hands of a bank, than to put it into the control of those officers who are loaning it out in every direction. As to the gentleman from Morgan, I understand that the bill has been amended to suit his notion.
Mr. SATTERWHITE. Not exactly.
Mr. SHIRLEY. It is not intended that this money shall be taken out of the vaults of the treasury when it is needed, but only when it is not needed. These officers have been getting interest on this money, and I would like to know why it is that they can get it and we can't? I believe the people may receive the interest as well as the officers. The bankers and the officers, as a class, have been in partnership in this matter; and this bill will break that up.
The House now took a recess till two o'clock p. m.
AFTERNOON SESSION.
The SPEAKER resumed the chair at two o'clock p. m. and announced the consideration of Mr. Woollen's bill [H. R. 24] to provide Designated Depositories of the Public Funds in the several counties of the State, and to provide for the enforcement thereof - the question being, Shall the bill pass?
Mr. WOOLLEN. Mr. Speaker, I would like to have the bill go over till next Thursday at two o'clock.
VOICES. "No, no."
Mr. WOOLLEN. I make that motion.
The motion was rejected - yeas 29 nays 46.
Mr. BAKER demanded the previous question but there was no second by a majority of the House.
Mr. GLASGOW moved that the bill be referred again to the committee with instructions to amend it in section three line four, by inserting after the word "counties" these words: "if there be one." Strike out the following clause, commencing in line seven: "if in their opinion the safety of the public funds demand it:" and strike out the proviso to said section which is in these words: "Provided, that when there shall be no proper bank, banking firm or association in a county lor such designated depository, then said Board of County Commissioners shall designate some bank, banking firm or association the most convenient to said county under the same conditions and regulations as heretofore named."He said the only change this will make is to take away from the commissioners the discretion as to requiring bonds, and striking out the proviso, so they can't take the money out of the county, page: 490[View Page 490] I find that when there is no bank in the county it has but a small revenue; and I think it should be imparatively required that the banks should give tree hold security.
Mr. WOOLLEN. About all that is required by the gentleman's amendment is found in the amended bill. The bill now provides that they shall keep five thousand dollars in the county, and all over that shall be deposited in the county bank, or other bank in some county contiguous.
Mr. Glasgow's amendment was rejected; and the question recurred on the passage of the bill.
Mr. WOOLLEN. Mr. Speaker, I desire to make a little speech on this question; a very few remarks - after gentleman have said what they desire to say upon it; and, if no gentleman desires to say any more, I will take that opportunity now.
Mr. SHIRLEY. I prefer unrestricted debate.
Mr. WOOLLEN. I would indeed, prefer that the matter might go over; because I have been very busy. I desire to say as far as any bank is concerned in this question, I have no interest directly or indirectly in any bank in the world. And if the bill would not enduce the public good, it is because I have made a mistake. And I say further that my experience is that the banks are opposed to it; and I do not want the fate of this bill decided by the argument that the banks are in favor of it, because as I have said the banks are opposed to it. - My friend from Morgan (Mr. Satterwhite) who has addressed the House was in favor of the bill and suggested many changes, but the majority were opposed to so many designated depositories. - Now what are the objects sought here? In the first place, when the State undertakes to deal with the banks; if she requires bonds it is for the security and safety of her funds beyond contingencies; and in the second place, it is that her funds shall not corrupt the public service and the bill is calculated to accomplish both of these ends.
Mr. BRANHAM. I desire to ask the gentleman if he is to make the closing argument?
Mr. WOOLLEN. I will answer that after I get through. I don't care how much argument there is to follow, but, if I should desire to do so I would reply. - This bill provides that, when, the money goes out of the hands of the Treasurer to the depositories, that they shall be under bonds. It is worth while to provide that these shall be safely in the bill, because this is a matter that requires the greatest safety. If my friend had fifty or a hundred thousand dollars in his posession, what could he do with it? He would go down street and place it in some safe bank where it would be as secure as if in his own hands. The banking institutions of this country are regarded as the safest places where money can be kept. And it in not a fact that the public money is placed there now by our Treasurers. Where are all the public funds deposited? - I dislike and disclaim what the gentleman from Jefferson has said about loaning the public funds. There is no proposition in the bill to loan the public funds. The funds are placed in the bank safes. The bank does not borrow it; but she pays a small interest for keeping it.
Since this matter has been up here, I have inquired into the manner of obtaining this interest by the different treasurers throughout the State: and I have a letter from Lafayette in which it is estimated that a hundren and fifty thousand dollars of the public funds of that county have gone into the banks in the way of interest, and otherwise lost through them in the last ten years. Has it come to this? Why, sir, you may go in to almost any county of the State and find large amounts of property in the hands of the ex-treasurers of the counties: You will find them owners of palatial residences, every dollar of the cost of which has come from the interest proceeds of the public funds with which they have been entrusted.
And I say, sir, that the public officers should not be held responsible for this: I do not believe it is right to hold the treasurers responsible for the accumulations of interest on the public funds. It is not logical to do so. If a treasurer has had the responsibility of taking care of the public funds and all the time he has been liable to pay it over - I say it's logical that he should be entitled to the interest. But you say the money should be placed in vaults; and it is not lawful nor right that it should be in the vaults and make the treasurer responsible for the funds. Why was not that thought of when the present law was passed ? Then if the treasurer is a bad man, there is no law that would bind his securities for the repayment of the money. If the proper county officers bind the depositories, they put the money down into these vaults.
Mr. Speaker, if I had the power to put these funds into the banks on interest, I venture to say that I would get five per cent, and in one year from thirty to forty thousand dollars would be the result of the earnings of the public money. Then why not do it ? Do we not all know that the public funds would be kept safely in these banks? The only difference is that if we do not pass this bill the individual treasurers will get the interest and the people will lose it. That is all the difference. It seems to me that the page: 491[View Page 491] public good demands that this corruption that has crept into the civil service should be removed.
There have been a great many objections made to the bill, but every one of them that has been valid has been removed by the amendments. In the first place the provision giving a discretion as to requiring bonds or not has been stricken out, and it has been made positive that the bonds - shall be required in all cases. There seems to be some idea that the worth of the bonds will depart if they be given by some one else beside the treasurer; and it is the argument of the gentleman from Jefferson [Mr. Branham] that if the depositories shall fail to pay over it would take some time to recover the money. Well, suppose the treasurer should fail - would it not take some time to recover it of him? The argument would reach both ways.
It is the general opinion all over the State - it is well known - that the banks are in the habit of buying their way into the treasurer's office; and this is done with the expectation that they will make it up off the interest on the deposit of the public funds. The interest on the deposits I learn does not amount to a cent less than ten thousand dollars a year. That can't be denied; and we must consider this for the purpose of fixing a fee bill for these officers.
It is not worth while, Mr. Speaker, to try to dodge this question. It is one that has been pressing upon the State for years. I have had some experience in the matter myself. So far as I am concerned I know that these abuses exist. I can say to the House here, that for four or five years, I paid interest on sums of four or five thousand dollars on money which I got from the county treasurer of my county - an average of about two thousand dollars a year. Is it possible that we can't remove these abuses? For this class of cases occur all over the State. The county had deposited in the bank of which I was President at the time some twenty-five to fifty thousand dollars, and we were paying the interest to the county Treasurer; the county Commissioners came to me and borrowed thirty thousand dollars for bridge building; and at the same time their treasurer was receiving interest on fifty thousand dollars from the same bank. And you can hardly find a township trustee that has not been corrupted by this system of dealing with the banks by the Treasurers.
Again, justice to the securities of the treasurers demand that something should be done. When the treasurer gives his security, it is understood the security is responsible only in the event of failure of the treasurer: and the security knows nothing about the loaning.
There is another thing here. When the Treasurer is elected he determines to place this money in some bank, and he goes to such bank and asks them to go upon his bond as security. The banks do go upon his bond; and so he becomes the mere tool of the banks. Then, if the bank breaks, the stockholders break, and the bond of the treasurer goes down with it.
This is a monstrous abuse that is corrupting every branch of the civil service, and it demands that the representatives of the people should take hold of it. I recollect now a heathen myth. It is said of Hercules, son of Jupiter by one of his wives, that when he was an infant and began to show signs of the great power in him, he became an object of hatred to Juno; and she sent two serpents to destroy him. But when they came upon him, comprehending the situation, the infant Hercules rose and took them each by the throat and strangled them. And I say now, that the representatives of the people here, like Hercules, should rise in their might and strangle this serpent; and no minor interest should prevent the execution of this thing. If it can be cured by legislation let us apply the remedy and remove the evil.
Mr. Speaker, there are some counties in the State that are particularly exercised in regard to this question of interest. The county of the gentleman from Morgan [Mr. Satterwhite] has had some experience in this matter ; and I am astonished that my friend has fallen in the path he has. I can remember the time when, if a man had a county order in his pocket, he would have to carry it for years before he could collect it not because there was not money in the treasury, but because the treasurer was loaning it, and would endorse the order, "No money in the treasury."
Mr. SATTERWHITE (interposing.) Do the people have the remedy?
Mr. WOOLLEN continuing. You ought not to allow this evil. When you issue an order on the treasury you ought to have the money to pay it. Ten minutes delay in a good bank would take away its reputation. I would never be put off with words : "Remedy, remedy:" I want the moneynot the remedy.
This bill requires the Governor, Auditor and Treasurer of the State to go with it where the public funds deposited will be safe. They can't go to the irresponsible banks ; for in addition to the character, the responsibility of the bank, the bill requires also the outside security.
Now, Mr. Speaker, there has to be some other argument to defeat this bill, than those which have been submitted yet in this discussion. - It has been asked as an amend- page: 492[View Page 492] ment to the bill, that it should provide that the public funds be scattered over the State. This bill now provides that the State funds shall be kept at the capitol of the State. My friend from Morgan desired that they might go elsewhere. I desire, sir, that the provisions of the bill should be so well and safely guarded, that, if it becomes law, no evil consequences could come out of it, because I know the author of a bill is always likely to be held responsible for the evils coming from it; and I thought the depositories of the State funds should be right where those who deposit them reside. And we all know that if there is anything the matter with the banks - if the air is filled with the least whisper as to their solvency - those chiefly interested in the neighborhood are all alive to it. Hence, if the banks become a little shaky, the State officers would be first to find it out; and hence I could not accommodate my friend from Morgan.
He then came and required a provision that the majority should govern in the choice of the depositories. I yielded to this; and the gentleman gained confidence. Then he wanted the bill to be so drawn that the Savings Banks anywhere in the State could get the State funds by giving the proper security. But that could not be, for then the bill would be exposed to the objection of my friend from Jefferson, and his objection would be reasonable. I am afraid there is a little mystery behind this. I offer no objection to debate, however, but I have objections to arguments against the bill from personal considerations.
A gentleman of this city came up and said to me: "You will have to change the bill to suit my views, or you can't pass it:" and I felt humiliated at being thus addressed as a representative of the people.
And another objection was made by the gentleman from Carroll [Mr. Richardson.] He simply said that the bill would make competition between the banks as to who should be treasurer. But the gentleman did not seem to consider that the banks are very envious of each other. Do we not know that is the case now ? Under the present system the banks are vying with each other as to the getting hold of the treasurer ; because he has the control of the county funds; and in a great many instances they get him. They always go with the party that has the majority. A man who is dealing in dollars and cents does not care anything about politics.
Mr. RICHARDSON (interposing.) would say in reply, that the banks tried to get a treasurer with us and failed : and the treasurer in my county is a Republican. So my argument is not political.
Mr. WOOLLEN. Now, Mr. Speaker, I just want to close with this reflection and a single remark: This is not a full House: and gentlemen who are going to unite against this bill know there is not a full House.
A VOICE. "I was acting treasurer of his county for a while, and I know."
Mr. WOOLLEN. Every gentleman knows that there have been great wrongs perpetrated on the part of the banks in regard to the interest on the public funds; and if this bill does not meet the evil then I can't find the remedy. If you hold the treasurer responsible for the funds, it seems to me that you can't hold him accountable for the interest: and, you may make as many laws as there are people in the State, but so long as you do not require the depositories to be in a certain place yon cannot hold them.
Mr. SATTERWHITE. I did go to the gentleman with my suggestions. I believe, in the first place, that the county money should be kept at the county seat: and I happen to be in business myself at a county seat, and I would like to have a chance at these funds. I also believe that the banks outside of Indianapolis ought to have a chance at the funds of the State - an opportunity for a part of the spoils.
Mr. SHIRLEY. Did not the gentleman take an interest in the nomination of the present treasurer, with a view to control the deposits in his bank?
Mr. SATTERWHITE. Of course I did; that was in my business. [Laughter.]
The SPEAKER (with the hammer.) That question has no reference to the bill; it is not in order.
Mr. SATTERWHITE. I wish to ask the gentleman from Johnson [Mr. Woollen] to point out a single bank that is opposed to this bill.
Mr. WOOLLEN. The First National Bank in Martinsville. [Laughter.]
Mr. SATTERWHITE. Was not the gentleman spoken to by a banker of this city ?
Mr. WOOLLEN. There were two: One was my brother who tried to get me to stop this thing; and the other was the president of the association who was joining my friend from Morgan. [Laughter.]
Mr. SATTERWHITE. While the bill provides that the people shall furnish money to bank upon, one of its provisions excluded me : therefore I wanted a share in the spoils.
Mr. GIVAN. One of the principal arguments of the gentleman from Johnson county is, that this bill provides additional safety for the keeping of the public funds. I ask the gentleman if I am not correct in this?
Mr. WOOLLEN assents.
Mr. GIVAN. It certainly does not afford any additional security, but it renders the se- page: 493[View Page 493] curity now fixed by law of a doubtful character. If I understand the bill, it provides that, when the Treasurer makes his deposit in the bank, he is released from his bonds to the extent of that deposit; but the law now holds the Treasurer to his responsibility in full. And although the present law requires the Treasurer to deposit in a certain place yet if he losses, the people do not lose. Now, if the Treasurer is released by this bill to the amount of his deposit, then it does not provide complete security for the public funds; it would not be as safe and secure as it is under the law now. Instead of having one party liable, as the law now is, you have the liability divided between two, three and four depositories: and I submit this question; which is the most secure, the obligation of one sworn officer, or the obligations of half a dozen others? It seems to me that obligations required of one man who is an officer of the law is more secure to the people than the obligations of those who have not these responsibilities and sanctions resting on them. - To whom do these public funds belong? To the State the counties and the townships. Now supposing this money goes into the hands of the depository, (and the county treasurer released from his bonds to that extent,) how do you suppose he is to make out his report? shall he say how much of the deposit belongs to the State, how much to the county, and how much to the township? And if you adopt this bill you do not wipe out the township treasurer entirely? What is the use of him if the county Treasurer discharges the duties of his office? Why not abolish it, and appoint a clerk in his place? Abolish the office and save expenses? Then under the proposed act your county Treasurer has no discretion whatever in this matter; but whenever the Board of County Commissioners say deposit the public funds then he must deposit them.
Mr. BRANHAM. I agree with the gentleman from Johnson (Mr. Woollen) when he says there is an evil in this matter. But he is not a wise legislator who legislates through impulse. The times has been extraordinary; and the condition of the revenue has been extraordinary; and I submit to the gentleman from Johnson whether it would be safe to base our estimates for the future upon the results in the past? There is an old adage: "An ounce of preventative is worth a pound of cure:" and the point I make here is this; we propose to change the time of the collection of the tax levy; we propose to leave the levy in the hands of the tax-payers till near the time when the State wants it, that this work of interest accumulations on it shall not take place. It is true that in the last four years there have been extraordinary accumulations in the treasury of the State which it is not likely will be the case again. One of these items of accumulation was the Sinking Fund; and the last Legislature provided for its distribution. Then the bill is to be reported from the committee on Ways and Means, allowing the taxes to be collected half-yearly - this will take away one half from the State Treasury. It will not be in the State Treasury and if it were in the Connty Treasuries they could not afford it, because it would be demanded of them almost immediately.The gentleman says the bill does not propose that the banks will use this money but that they would pay a nominal interest on the same for the purrpose of keeping it! - If there is such a bank on this continent I should like to know it.
Mr. WOOLLEN. I do not want it to go the country that I made such a foolish statement.
Mr. RICHARSON. I was going to ask the gentleman from Johnson to explain that.
Mr. WOOLLEN. What I said was this: that a banker never talks about his deposits as being loans.
Mr. BRANHAM. The case in his own county, of which the geutleman made a statement, seems to me very extraordinary also. He says, that while the Treasurer of that county had fifty thousand dollars of the funds of the county in the hands of the bank of which he was president, the commissioners of the same county came to the same bank and borrowed thirty thousand more! Now, sir, I ask what remedy there is for such a state of things? Why can't this thing be repeated if the county treasurer can thus bid difiance to the commissioners? Why can't the same case occur under the the gentleman's bill?
Mr. WOOLLEN. While they were borrowing at ten per cent. - and the funds belonging the to county - their treasurer was receiving interest on that money. If the county had been getting the interest on the money it would have been a different thing.
Mr. BRANHAM resuming. I will make two points now instead of one. It comes back to the point, that the proper custodians of the public money is the people themselves; and that it should not be taken from the people till the public necessities require it. - The gentleman said also, that he was informed that Tippecanoe county has lost one hundred and fifty thousand dollars of their county funds.
Mr. WOOLLEN (in his seat.) I do not vouch for it.
Mr. BRANHAM. If the gentleman does not vouch for the correctness of the letter why does he introduce it?
Mr. WOOLLEN. The writer of it is a page: 494[View Page 494] gentleman of standing, and that is his estimate.
Mr. BRANHAM. I recollect hearing the gentleman describe a certain notorious man of chivalry that had trouble in the wine cellar; and I think that letter ought to go along with that chivalrous hero of Cervantes. It should not be introduced here as an argument. It is a good deal Don Quixotish; for while he thinks the blood of his adversary is flowing, it's nothing but wine.
But the gentleman has not made any attack on the position I take, which is this : that we should so shape the revenue laws that not a dollar shall be taken from the people till the public necessities require it; and then, that it shall go back to the people as soon as possible. While I have great confidence in the gentleman from Johnson, I am obliged to say that his figures are too large here.
I tell you again sir, that in our legislation we should avoid the influences of concentrated capital. If there is anything that can bid defiance to the power of the people it is the power of concentrated capital: and I am unwilling to make the people tributary to this power.
Mr. WOOLLEN. I want to ask the gentleman if his own county is not now, or perhaps soon will be, going to vote a tax of two hundred thousand dollars upon her people for railroad purposes?
Mr. BRANHAM. There is a scheme of that kind pending: but I do not know whether it will carry or not.
Mr. WOOLLEN. Well, if it does carry, I want to know what he is going to do with the money till it goes to the railroad company?
Mr. BRANHAM. I wish to say a word to the House as to my vote on that bill. Personally I was opposed to that bill. It was under the direction of my constituents that I voted for it. But I want to say to the gentleman that there is now in the files of the House a bill that places in the hands of the Commissioners the power to suspend the tax till the work shall be done. Now, sir, it is not right to go out into that line of argument. The gentleman puts me in mind of a Gatlin gun: his balls are not heavy, but they come too fast, and a person does not know when he is going to be hurt. I have heard men complain that there were a hundred millions of dollars locked up in the Treasury of the United States, and Boutwell would not let it out. And I just want to say to the House that no hundred millions ever paid the Government so well as that hundred millions which Boutwell locked up; and this is the reason : The moneyed men had made gold an article of trade, and they had made "corners" on gold. Now, what was the object of retaining that hundred millions? We all remember when gold was worth two hundred per cent. I happened to be in the city of New York on that "Black Friday." The object was to say to those gold rings in New York : You shant make a corner on gold that shall paralize the industry of the country, I was in New York when that document canie which put those millions on the market, and kept them on the market, for that very object; and no hundred millions ever effected a better purpose.
Now, sir, we do not want anything of this kind. It's true, if we had reached specie payments, we should not want that hundred millions; but so long as the gold corners are there, so long these checks are necessary.But there was another shot from the man's Gatlin gun. He says the banks loaned money to manage the elections. But then nearly half the counties in the State are democratic. In Johnson county they may have used their money in that way ; but in the counties below and above here they used it the other way. However, I do not know anything particularly about that, nor much about anything else. But you concentrate capital, and then it's loaned at the dictation of two or three men: and this cannot be the case when it is distributed all over the State. Herein is the reason why I am opposed to this bill. I say: Let the State take charge of and control, her funds; and let the several counties manage theirs. But I wish to ask the gentleman if we ought to clear these bank men, if the county treasurers get the money?
Mr. WOOLLEN answered affirmatively.
Mr. BRANHAM. But are these parties into whose hands gentlemen propose to put this money anything more than mortal men? liable to bad influences, like the rest of us? Where will you find one of them that is not selfish to the bottom? I say: it's a dangerous thing to put these funds anywhere. I don't care what the banks want. I have not much in money or stocks, and never expect to have much. It's probably true - that letter which the gentleman from Johnson quoted - that Tippecanoe county has lost one hundred and fifty thousand dollars by her treasurer and the banks.
Mr. WOOLLEN. I said in ten years the loss on all the funds of the county.
Mr. BRANHAM. I hope, sir, that this bill will not pass ; but I do hope the House will pass the Committee's bill to admit of the collection of the taxes half yearly.
Mr. SHIRLEY. I want to say to the gentleman from Jefferson that I did not refer to the National Treasury. I said that a hundrrd millions of dollars had been obtained through the banks and used as a cor- page: 495[View Page 495] ruption fund in the elections - used by the National Banks. And I alluded to this to show the evil growing out of the system of allowing the public officers to use the public funds for their own advantage. I want the elections pure. I want to see the time when money cannot be used to buy votes and to control nominations and elections. And it is my effort to take the public funds out of the hands of these officers who trade with the banks upon them. I do not want to concentrate capital. I regard this bill as a measure in the interest of the people, and against the machinations of the banks and the public officers.
Mr. BRANHAM (interposing.) The gentleman makes the argument that the National Banks used the money in elections; - how then did it come that they were beaten in this State.
Mr. SHIRLEY. I don't know; the National Treasury is bigger than the State Treasury. [A laugh.] I will say once more, in conclusion : I am not acting in the interest of any bank, and never was. I believe this bill is in the interest of the people. The gentleman says he wants the taxes paid semi-annually, so as to avoid accumulations of large sums in the treasury. But that bill may not pass ; and if it does, the friends of this bill only ask, that when there is money in the hands of the treasurer, not to be used for some time, he shall not put the money out at interest, and the proceeds into his pocket - a thing which we all know the treasurers now do, even down to the punny office of township trustee: and it is charged that the school trustees are getting into this practice.
Sir, there will always be public funds in the hands of the treasurers. But if you say there will be no money soon, that is no reason why we should not provide that under the next pet of officers it shall be used in such a way that the people shall get the benefit of it. It's now narrowed down to the question, whether the proceeds of the interest on the public funds shall go to the people or the officers? Gentlemen can take their choice. I will take mine.
Mr. BARRETT. I can't see why it is that the gentleman from Jefferson fights this bill so hard. Does he expect to become State or county Treasurer? He says also that the State has become so poor she has no money. Then why fight the bill? If the State have no money the banks will not get hold of it. And if he is going to manage the funds so that there will be no money to be loaned - if he is going to arrange the law so that the money will be paid out as fast as it is collected - what is he afraid of? But he knows very well that there will be money on hand in the treasury which should go on deposit. Does he want to continue the present practice, and not allow the proceeds of interest to go into the treasury to lesson the taxes of the people? We all know that the treasurers do not keep this money in their pockets. There is not a county treasurer in the State but makes deposits of the public funds. I will venture here to make this assertion: that if this bill becomes a law, the people of the State will receive in the way of interest at least two hundred thousand dollars annually, while now they receive not one cent.
Mr. BRANHAM (interposing.) The gentleman states, that, if this bill pass, the people will gain two hundred thousand dollars annually. That is the interest on four millions at five per cent.
Mr. BARRETT. I think there is more than that; when we take all the funds of the State, Counties, and Townships: I think they would aggregate more than five million dollars. If the gentleman is going to get up a bill providing that the treasurers shall not deposit their funds in the banks, then there will be consistency in his opposition to this. But it seems that he is willing that the Treasurer shall continue to deposit in the banks, without the banks giving any security. We fear that the treasurers will continue to deposit and we want the security and the interest.
Mr. COBB. I have only a few words to say, and I should not care to occupy the time now from the fact that I have already had one speech against the bill; but there are one or two reasons that should prevent its passage. I have been a little surprised at the course the argument has taken. It is the first time in my life that I ever heard our democratic friends argue in favor of banks, in favor of concentrated capital and against the people; because the proposition here is to take the public funds out of the hands of the people and place them in the hands of three individuals here in Indianapolis on the part of the State, and of three individuals called county Commissioners on the part of each county of the State. And gentlemen seem to argue as though the State Treasurer and the county officers were about the only men in the State that ought not to be trusted. But now looking at the past and at the politics of the officers which the State has had for the last two years till within the past few days - this is a singular bill to come from the democratic side. - Well; gentlemen can draw their own conclusions. Is it that they do not want the Repnblicans to have any chance?
Mr. WOOLLIN (enterposing.) I wish to ask the gentleman if he puts the argument on such a plea as that?
Mr. COBB. I say this looks to me a little like political tricking. But there is another page: 496[View Page 496] objection to the bill. They say it is a public outrage for the county Treasuries to get two or three per cent. on the public funds. Now I am in favor of their paying the interest when It becomes due; and I think every honest man would do that whether Republican or democrat. But to here our democratic friends talking as if they were in earnest in the matter, and saying that we should take the power of electing the custodians of the public fund out of the hands of the people, and take another class of custodians, and provide that they shall be elected by three individuals in each county, and three individuals for the State, - and then have the State and county Treasurers go into partnership with them and bank and speculate on the public funds! - I cannot think that the author of the bill was candid in spirit when he drafted it; nor do I think much of his candor when he used this expression: urging that the banks are safe places for the public money, he said they will pay interest for the privilege of keeping it! -They are not fools enough to handle money for nothing. And it is a proper use of the public funds, that they should speculate upon them? The effect will be to keep the money out as long as possible, and to put off the payment of the county orders as long as possible. The gentleman (Mr. Woollen) said that he knew of a case where a county had fifty thousand dollars deposited and, yet at the same time for a specific purpose they were obliged to borrow thirty thousand. But now I can suppose that perhaps it did not make much difference because perhaps the specific fund could not be used and perhaps the bank could use it; and when called up-no for it they could take somebody elses money. I know very little about banking, but I think there is in it about this principle; if a dozen men have deposits in the same bank, the bank can loan to the extent of one half the amount deposited with them; and then they can pay a good run of checks by taking somebody elses money, so using about three-forths of the amount of the money deposited with them - money that they would be obliged to pay back at any time.
But now let us suppose one of the depositories to become a little shaky - what will they do? They will go to the county treasurer and insist that the trust shall not be paid back till they can make certain collections. It seems to me that it will cause the banks of the sound article to go into a dangerous partnership. The county Treasurers, in violation of official obligations do now receive four or five per cent, on these deposits; and we propose here not only to legalize that, but we propose to allow the banks to take these same funds and speculate on them loan them out and get ten per cent. interest on them: because if they did not get ten per cent none could see how they could pay the treasurers five per cent.
It seems to me Mr. Speaker that we ought to adopt a course something like this: Let the people's custodians have charge of these funds and let them deposit wherever they have a mind to and make them answer under oath in their annual settlements how much profit they have made and if they have got it in bank, and then let them pay it all over. So, if your counties are ready to go into partnership with anybody in this matter let it be with the treasurers and not with a few men who are unknown to the people.
Then there would not be those exposures to losses: because, one of the strongest objections that can be urged against this bill is this having three or four depositories, which would lead to confusion in regard to the liabilities. It would lead to interminable litigations to ascertain who is the responsible party. If the county or township wish to go into partnership with anybody or any bank, let the people select their men. The only reason why the present law fails is, because we have not a statute providing that treasurers shall deposit these funds in a certain place.
This thing is so plain that it seems to me, if the House wished to strike at the evil, we would not take such a roundabout way of doing it, and a way of such doubtful constitutionality as this. For the constitution requires that there shall be elected by the people a State Treasurer; and that he shall be in fact the Treasurer - shall have in fact the custody and control of the public funds. The constitution provides also, that there shall be elected by the people amongst the other officers of the county, a county treasurer; and it seems to me that these treasurers should keep these funds according to the requirements of the Constitution; and if you can find any place in the Constiution which requires that the public funds shall be kept in some bank or banks, it is in some part of the Constitution which I have never found yet. - It seems to me, that, for every reason which I can conceive, this bill ought not to pass. It seems to me that the present law keeps these funds safely; and it seems to me further, that no member here, unless he have an interest in some banking institution, or in some one of those numerous rings, can, under any circumstances, vote for this bill.
Mr. COWGILL. Mr. Speaker, I want to give some of my reasons for voting as I shall on this question. Under the existing law and the existing facts, I shall vote in favor of this bill. If we had a statute which allowed these funds to remain in the hands page: 497[View Page 497] of the people until called for by the necessities of the government, then I would be satisfied with the law as it exists. But so long as there is no such law, I think there ought to be a law passed to cure the existingevils. It is a fact that there must accumulate a considerable amount of money in the treasuries of all the counties: and it is also a fact that these funds are used by the treasurers: and by this bill the question is raised whether these accumulations of interest on these funds shall be for the people or for the officers? That is the question under this bill. I can see no clanger in allowing these funds to be used in this way. And when so used those who are the owners of the funds should have the proceeds of the interest.
Mr. KIRKPATRICK. Mr. Speaker, I think too much legislation is not profitable. I have confidence in my county officers; and my vote on this bill will indicate the amount of confidence I have in them.
Mr. MELLETT. I feel moved to say a word on this bill. If I could see by this bill any reasonable probability of saving any money to the people, of course, I should vote for it; because, like all others here, I am afraid of the people, and just now in their service. The day has passed when, by legislation, men can deceive the people about whom we talk so much. They are apt to unravel all mysteries. Time would determine whether the people would be benefitted by such a bill. I do not believe they would. I take it for granted, (but I do not grant it entirely,) that the State has an interest in the public funds - it is a deferred interest. But, sir, what will you get by this law? True you may get a nominal interest; but the practical effect will be to reduce the rate of interest. The banks will get the funds at their own price. They will combine. You just place it in their power to say what interest they will give. Why not fix the rate of interest in the bill? - establish a minimum - six per cent. - four per cent. - two per cent., or the fourth of one per cent.be sure that you are going to get something ? But then, anyway, the object of this bill would be to draw this money away from the channels in which it now circulates. Where are the township funds now? In the hands of the friends and neighbors of the trustee. I have no doubt that the qualified public officers should have charge of the public funds. - If you think the bank men can't dodge the law in cases of this kind, I think they can and would, and I cannot but believe that the effect of this bill would be injurious to the people.
Mr. GIFFORD now demanded the previous question, and there was a second: whereupon the main question was forced, and the bill was rejectedyeas 27, nays 58.For the votesee XIV B. R. p. 165.32
