576 



MISSOURI. 



The committee now directed their attention 

 to two questions : 1. What use did the Treas- 

 urer make of the balances on hand ? 2. Was 

 there on December 31, 1878, as there should 

 have been, $472,465.92 of actual money in the 

 hands of the Treasurer ? It was found that 

 the cash on hand, except a small sum, was de- 

 posited from time to time with various banks, 

 the largest deposits being made with the Bank 

 of St. Joseph and the Mastin Bank of Kan- 

 sas City. On Augast 3, 1878, the latter bank 

 failed, having on deposit money of the State 

 amounting to $506,187. As security for this 

 sum, the State Treasurer held collaterals on 

 which $220,000 was realized. This amount, 

 according to his books, he credited to the bank, 

 leaving a deficit to the State of $286,187. There 

 was, however, a discrepancy between the State 

 Treasurer's books and those of the bank ; the 

 latter showing that the bank was indebted to 

 the State only in the sum of $59,732. The 

 committee were of opinion that the Treasur- 

 er's claim was correct, but they referred the 

 question to the General Assembly, recommend- 

 ing that further 'investigation be made. The 

 committee then reported that there was in the 

 State Treasury on December 31, 1878, the prop- 

 er balance, but made up of the following 

 items : 



Cash in Bank of Commerce, St. Louis 



Current funds in vault 



National Bank State of Missouri claim 



The Mastin Bank claim 



Wolf scalp certificates 



Deposit with J. W. Reid, of Kansas City, to in- 

 demnify securities on attachment bond against 

 Mastin Bank 



Clinton county bonds 



Making a total of. $472,465 92 



" Of the balance so called," says the report, 

 " it will be seen that only $124,800.87 is avail- 

 able to meet demands on the Treasury. It can 

 not now be determined how much money will 

 be realized, or when, out of the remaining as- 

 sets." Of the bond of the State Treasurer in 

 the sum of $1,000,000 the committee reported 

 as follows: "Eight of the eleven bondsmen 

 are reported insolvent ; two of the others re- 

 puted wealthy, but nothing can be made out 

 of them by execution. When this bond was 

 given a portion of the sureties qualified as worth 

 one and a half million dollars. The new bond 

 given by the Treasurer has not come into the 

 possession of the committee." 



State Treasurer Gates gave the following ex- 

 planation of his transactions : 



When I came into office I was of the opinion that 

 legislation was necessary for the successful execution 

 of the provisions of the Constitution as regards the 

 deposit of State funds, and so stated to the Twenty- 

 ninth General Assembly in my letter bearing date 

 March 19, 1877, as follows: "I further state that 

 inasmuch as there is no statutory law giving effect 

 to section 15, article 10, of the Constitution, I have 

 not observed the requirements of the same, but have 

 the various funds in my custody so situated that I 

 can subject the same to the requirements of any le- 

 gislation that may be adopted for the government of 

 the Treasury Department. Believing that the pres- 



$122,303 37 



2,497 50 



8,045 25 



286,187 80 



4,432 00 



5,000 00 

 49,000 00 



ent General Assembly would, at an early day, enact 

 laws enforcing the Constitution, the funds in my 

 custody have been temporarily deposited in the fore- 

 going banks for safe keeping, and no interest has 

 been paid for the same." In this construction of 

 the Constitution I was supported by the opinion of 

 the Attorney-General, also by the report of the Com- 

 mittee of the Twenty-ninth General Assembly, ap- 

 pointed for the purpose of ascertaining what sections 

 of the Constitution needed legislation for their en- 

 forcement. 



The Legislature failing to enact a law governing 

 the safe keeping of the State's funds, 1, believing it 

 to be the wish and desire of the people that the 

 funds of the State should be deposited as named in 

 section 15, article 10, of the Constitution, did, on the 

 15th day of May, 1877, prepare and mail to the prin- 

 cipal banks of the State a circular letter soliciting 

 proposals for the safe keeping of the State's funds, 

 and on the second day of June following did select 

 the Mastin Bank of Kansas City as the State's depos- 

 itory, it offering to pay the highest rate of interest 

 on such deposits, and to furnish the State, free of 

 charge, such exchange as might be necessary. This 

 bank failing to give bond satisfactory to the Govern- 

 or and Attorney-General, the funds were permitted 

 to remain as then deposited until June 19, 1877, when 

 the National Bank of the State of Missouri closed its 

 doors. Although I had only $4,685 in said bank, 

 unfortunately for the Treasury, the Bank of St. Jo- 

 seph, wherein was deposited at this time the bulk 

 of the State's money, had in said bank of the State 

 of Missouri about $500,000. Fearing that this sus- 

 pension would cause such a panic as would cause the 

 Bank of St. Joseph to suspend, I drew out of the 

 Bank of St. Joseph $434,715.49, balance in said bank 

 after deducting the amount it had tied up in the sus- 

 pended bank, and deposited it with the Mastin Bank 

 of Kansas City, taking as security for this and such 

 other deposits as might be made therein a personal 

 bond of the bank in the sum of $1,000,000, with the 

 endorsers as stated in this report. From that time 

 no deposits were regularly made with the Mastin 

 Bank until November, 1877, when I notified said 

 bank to place in New York funds for the purpose of 

 paying State bonds then maturing. To my surprise, 

 I was informed by its officers that it would be im- 

 possible for it to meet rny demands. Believing that 

 it would be hazardous to'close the bank, I proceeded 

 to withdraw the funds, as fast as possible without 

 causing a panic. This I did until January, 1878, 

 when, owing to the suspension of the First National 

 Bank of Kansas City, a run was made upon the Mas- 

 tin Bank, which would have forced it to close its 

 doors. Being in the city at that time, I found it 

 necessary to furnish it with funds for my own pro- 

 tection, which I did, taking the collateral securities 

 here reported, also $350,000 in bonds of the National 

 Water-Works Company of Kansas City. However, 

 the bank closed August 3, 1878, and held $506,187.80 

 of the State's money. On October llth I realized 

 from sale of the $350,000 water bonds $220,000, leav- 

 ing the balance at that time $286,187.80, or about $20,- 

 000 less than when I first discovered the bank to be 

 in an unsound condition. 



After the failure of the National Bank of the State 

 of Missouri, part of the funds of the State were de- 

 posited with the Boatmen's Savings Bank until Sep- 

 tember 30, 1878, when the Bank of Commerce wa 

 selected as the State's depository. 



In October criminal proceedings were begun 

 against Treasurer Gates. Indictments were 

 found charging him with receiving benefits 

 and advantages from the deposits of money of 

 the State made in the Mastin Bank. Owing 

 to the absence of witnesses, the trial had not 

 been commenced at the close of the year. 



Bonds of the State to the amount of $838,- 



