THE OI-FICE OF COUNTY TREASUR of COOK COUNTY ILLINOIS AN INQUIRY INTO THE AD^ : WITH SPECIAL REFEK OF INTEREST < • K t P K T I* R E P A R E D o V i H L CHICAGO BUREAU OF PUBLIC EFFICIENCY NOVEMBER. 1913 PRIOR PUBLICATIONS. ^lAethod of Preparing and Administering the Budget of Cook County, lUinoifi. January, 1911. fl Proposed Purchase of Voting Machines by the Board of Election Commissioners of the City of Chicago. May, 1911. (Out of Print.) . : . , r? Street Pavement Laid in the City of Chicago: An Ibqniry Into Paving Materials, Methods and Besults. June, 1911. (Qn% of Print.) 4 Electrolysis of Water Pipes in the Oity of Chicago. July, 1911. (Out of Print.) X 5 Administration of the OfHce of Becorder of Cook County, Illinois. Septemher, 1911. 6 A Plea for Publicity in the Olftce of County Treasurer. October, 1911. (Out of Print.) 7 Eepairing Asphalt Pavement: Work Done for the City of Chicago Under Contract of 1911. October, 1911. (Out of Print.) 8 The Mimicipal Court Acts: Two Belated Propositions Upon Which the Voters of Chicago Will Be Asked to Pass Judgment at the Election of November 7— Vote No, October 31, 1911. (Out of Print.) 9 The Water Works System of the City of Chicago. By Dabney H. Maury. December, 1911. 10 Bureau of Streets; Civil Service Commission; and Special Assess- ment Accounting Syst^n of the City of Chicago. December, 1911. 11 Administration of the Office of Coroner of Cook County, Illinois. December, 1911. 12 . Administration of the Oifice of Sheriff of Cook County, Illinois. De- cember, 1911. (Out of Print.) 13 Administration of the Office of Clerk of the Circuit Court and of the Office of Clerk of the Superior Court of Cook County, Illinois. December, 1911. 14 The Judges and the County Fee Offices. December 19, 1911. 15 G^enera^ Summary and Conclusions of Beport on the Park Ctovem- ments of Chicago. December, 1911. 16 The Park Governments of Chicago: An Inquiry Into Their Organ- ization and Methods of Administration. December, 1911. 17 Offices of the Clerks of the Circuit and Superior Courts: A Supple- mental Inquiry Into Their Organization and Methods of Admin- istration. November, 1912. 18 Administration of the Office of the Clerk of the County Court of Cook County, Illinois. November, 1912. 19 Office of Sheriff of Cook County, Pilinois: A Supplemental Inquiry Into Its Organization and Methods of Administration. Novem- ber, 1912. S6 Orowing Cost Of Elections In Chicago and Cook County. December $0, 1912. 81 The Voting Machine Contract. A Protest Against Its Becognitlon In Any Form by the City Council of the Oity of Chicago. Jan- uary i, 1913. THE OFFICE OF COUNTY TREASURER of COOK COUNTY ILLINOIS AN INQUIRY INTO THE ADMINISTRATION OF ITS FINANCES WITH SPECIAL REFERENCE TO THE QUESTION OF INTEREST ON PUBLIC FUNDS REPORT PREPARED BY THE CHICAGO BUREAU OF PUBLIC EFFICIENCY 315 PLYMOUTH COURT CHICAGO BUREAU OF PUBLIC EFFICIENCY TRUSTEES Julius Rosen wald. Chairman Alfred L. Baker, Treasurer Onward Bates Charles R. Crane Henry B. Favill Walter L. Fisher George G. Tunell Charles E. Merriam Victor Elting Harris S. Keeler, Director George C. Sikes, Secretary T. W. Betak, Accountant i^ETER White, Consulting Accountant TABLE OF CONTENTS. Page. FOREWORD 4 INTRODUCTION 5 SUMMARY AND CONCLUSIONS 11 Interest on Public Funds 11 How the County Treasurer Administers and Accounts for Public Moneys 15 Remittances to Taxing Bodies 17 The Treasurer 's Compensation 17 Needed Legislative Changes 18 Some Pertinent Questions 20 TEXT OF REPORT 21 The Powers, Duties, and Compensation of the County Treasurer. Needed Legislative Changes 21 Duties of Treasurer 22 Duties of County Collector 22 Duties of Town Collector 23 Duties of Town Supervisor 24 The Treasurer's Control of Public Funds 24 The Bonds Required of the County Treasurer 25 The Treasurer's Compensation 26 Needed Legislative Changes 29 The Manner in Which the Funds are Handled and the Accounts Thereof Kept and Audited 31 Permission to Inspect Books Demanded by Bureau Trustees. . . .31 Inspection of the "Public" Records Permitted — What They Disclosed 32 The "Treasurer's" Records and Accounts 33 The ' ' Collector 's ' ' Records and Accounts 38 The ' ' Collector 's ' ' So Called ' ' Private ' ' Records 39 The "Collector's" "Public" Records 40 The "Public" Records— What They Showed 41 Cash Receipts Withheld from "Public" Records 42 Conditions Resulting from the Manner in Which the Ac- counts are Operated 46 Remittances to Taxing Bodies 49 The Audit of the Treasurer's Accounts 51 The Question of Interest on Funds in the Custody of the County Treasurer 53 Mr. O'Connell Refuses to Turn Over Interest Earned in 1912. .57 The Investigation by the Bureau 59 Procedure Employed in Estimating Cash Receipts 62 The Interest Computations of the Bureau 66 963264 FOREWORD. This report is in line with the general purpose of the Chicago Bureau of Public Efficiency to furnish the pub- lic with exact information concerning public revenues and expenditures. It is submitted to the tax-paying public of Cook County in the hope that, through the publicity which it will give to the scandalous conditions which it discloses, it may be instrumental in bringing about a thorough investigation of the manner in which the Coun- ty Treasurer of Cook County handles and accounts for the public moneys, including the interest earned thereon, which are entrusted to his custody, and in putting an end to many long-standing abuses connected with the admin- istration of the office of County Treasurer. Chicago Bureau of Public Efficiency, Habris S. Keeler, Director. INTRODUCTION. In the accompanying report on The Office of County Treasurer of Cook County, the Chicago Bureau of Pub- lic EflBciency presents the situation as it exists to-day with respect to the manner in which the County Treas- urer of Cook County handles the public moneys which are entrusted to his custody. The various funds handled by the Treasurer aggregate in amount approximately $55,000,000 each year and per- haps the most important aspect of the situation with which this report deals is the question of interest on the very large sums which are from time to time subject to the control of this official. The question of the retention, by public officials en- trusted with the custody of public moneys, of the inter- est earned on those moneys, when they have been placed on deposit in the banks, is a matter which has long at- tracted public attention and toward which, in recent years, both the public and the custodians of the funds have shown a marked change of attitude. There never has been any serious controversy as to the moral right — and, in the case of the County Treas- urer, as to the legal right — of the taxpayers to such in- terest when it has been earned. On the other hand, it is a well recognized fact that a great deal of this interest has not been turned into the public treasury. It has been a common practice in the past for the custodians of these funds to regard the interest as a legitimate "spoil" of office, and to retain it for their own use. This has gen- erally been done under the pretext that they were under 6 Chicago Bureau of Public Efficiency no legal obligation to account for the interest. The prac- tice has not been carried on openly, however, so that the public might know the nature or extent of the operations involved. Taxpayers and their representatives have been denied access, not only to the interest accounts of these officials, but to the general accounts of the funds in their hands. Contracts with the banks, relating to inter- est payments, and even the names of the depositaries themselves have been concealed. In fact, the whole ques- tion of interest on public funds has been shrouded in secrecy, while various subterfuges have been resorted to to keep the public in as complete ignorance as possible concerning the manner in which the public money has been handled. A glance into the conditions which have made this state of affairs possible will show that usually such legislation as has existed on the subject of the custody of public funds has clothed the custodians of these funds with very wide discretion and authority in the handling of the moneys entrusted to their keeping, without requiring them to keep complete and proper accounts subject to thorough and disinterested audits. Not infrequently, also, the financial responsibility which these officials have been required to assume has been greater than it should have been, and the compensation provided for them has not been at all in proportion to this responsibility and the duties required of them. In nearly every instance where there has been a failure to account for interest, it will be found that the Legislature has failed to pass ade- quate laws covering the manner in which the funds should be handled and the accounts thereof kept, as well as to provide for a proper degree of publicity with respect to County Treasurer of Cook County 7 the transactions of the office in question. All of the fore- going conditions are to be found to-day in connection with the administration of the funds entrusted to the County Treasurer of Cook County. Within the last few years public opinion, which former- ly had seemed to accept the situation as inevitable and had been disposed to condone the offense when public officials failed to account for interest, has undergone a complete change in its attitude toward the interest ques- tion. In response to the general demand for a changed order of things, the General Assembly has passed reme- dial leirislation covering particularly State funds and a portion of the funds in the hands of the Citj' Treasurer of Chicago. Other public bodies, notably the Sanitary District, and the South, West, and Lincoln Park Boards, have opened their books to public inspection and have accounted for interest on their bank deposits. There has been no such legislation, however, with re- spect to the funds handled by the County Treasurer. As a result of pre-election pledges, the present County Treasurer, William L. 'Council, and the two treasurers who preceded him in office, Jolin R. Thompson and John J. Ilanberg, have turned over to the County certain lump sums as interest on bank deposits. It is a serious reflection upon the men who have held that important office, tliat no Count>^ Treasurer has, as yet, seen fit to conduct its affairs in accordance with the spirit of the times which demands light on the financial methods of public officials and a proper accounting for the interest on the funds administered by them. This report has been prepared primarily for the pur- pose of presenting data in the possession of the Bureau 8 Chicago Bureau of Public Efficiency bearing on the question of interest on funds handled by the County Treasurer. There are several other ques- tions connected with the administration of these funds, however, which are so closely related to the interest ques- tion that it has been thought best to include a discussion of them in the report. Among the more important of these matters are the question of the manner in which the funds are handled and the accounts thereof kept and aud- ited; the question of the right of taxpayers to inspect the Treasurer's records and accounts; the question of the extent to which the Treasurer should be held responsible for the funds; and the question of the Treasurer's com- pensation. As pointed out in the text of the report, the County Treasurer serves in three important capacities, namely, as ''treasurer," as ''county collector" and as "town col- lector." The conduct of his office necessarily involves a large amount of administrative detail not directly con- nected with the questions considered in this report. No attempt, therefore, has been made to cover the business procedure of the office or to describe in detail the account- ing methods employed or the books and records used, ex- cept in so far as it has been necessary to do so to explain the general manner in which the moneys coming into the control of the Treasurer are handled and accounted for. The inquiry upon which this report is based was begun in November, 1911. The presentation of the matters cov- ered by the report has been delayed by the refusal of the Treasurer to permit the examination of certain impor- tant records of his office. The records, the examination of which was denied, are kept at public expense and by public employes, but per- County Treasurer of Cook County 9 mission to inspect them was refused on the ground that they were "private" records. The matters described on pages 61-65 of the report illustrate, in a measure, the burden of work which the refusal to permit an examina- tion of these so-called ** private" records imposed upon the Bureau. The period for which the accounts described in the re- port were examined began December 5, 1910, and ended December 21, 1911. Upon this latter date the books of the "treasurer" were closed for the first fiscal year of Mr. O'Connell's term of office. The interest computa- tions cover the period of such fiscal year only. SUMMARY AND CONCLUSIONS. INTEREST ON PUBLIC FUNDS. Treasurer "William L. 'Connell paid over to the Coun- ty, as interest earned during the year 1911 on bank de- posits, $150,557.39. The Chicago Bureau of Public Ef- ficiency computes the interest which the County should have received from the funds held by the County Treas- urer during that year to be $281,526.18. The County has received, therefore, $130,968.79 less than the amount which the Bureau estimates should have been received and turned over by the County Treasurer. The exact amount of money actually received l)y the County Treasurer as interest, or any equivalent of inter- est, on public funds in his custody, cannot be stated with certainty. The reason for this is that, according to the astonishing statement of the County Treasurer, he has no books or records showing where and when he made de- posits of public funds or the amount of the interest or other returns he has in fact received for the use of these funds. If he has any such records, he refuses to disclose them. Moreover, tiie exact amount of interest which the fimds handled by the Treasurer might have earned at any given rate, if they had been deposited promptly in the banks, cannot be stated with certainty. The reason for this is the fact, also astonishing, that the County Treasurer maintains two classes of records, — namely, those which he calls "public" records and those which he calls "pri- vate" records. The "public" records of the office do not contain entries showing the amount of his cash receipts 12 Chicago Bureau of Public Efficiency from day to day. The so-called ''private" records do contain such entries, but the Bureau was refused permis- sion to examine them. Because of these conditions, the Bureau was compelled to estimate the Treasurer's daily cash receipts in the manner set forth in the text of this report, and then to determine the amount of his daily cash balances on the basis of such estimated receipts. Fortunately, by analyzing the records to which the Bu- reau did obtain access, it has been possible to make a close estimate of the amounts which were available for deposit and upon which interest should have been earned and paid over to the County. The interest figures of the Bureau are based upon esti- mated average daily balances and a rate of 2^/4 per cent. This is the rate paid by the banks on funds deposited by the City of Chicago. The Bureau regards this rate of 2^ per cent as conservative, inasmuch as by withholding remittances from the City and other taxing bodies the Treasurer was apparently able to maintain a balance of ten million dollars or more continuously for a period of more than six months. It is quite probable, however, that the Treasurer should have received and turned over even more than $281,- 526.18 in interest. The Treasurer is required to collect and turn over to the County penalties in the form of in- terest at the rate of one per cent a month on all de- linquent real estate taxes collected by him after May 1. During 1911 he turned over only $113,663.24 as collections received from this source. If $113,663.24 is all he re- ceived in fact from this source, then he must have col- lected prior to May 2 more than the amounts which the Bureau has estimated he collected up to that date. In that event, the interest which he should have received County Treasurer of Cook County 13 from his general balances should have been even greater than $281,526.18, the amount estimated by the Bureau. If he collected, prior to May 2, only the amounts which, from the records available to it, the Bureau has esti- mated he collected up to that date, then he must have received as penalties for delinquency more than $113,- 663.24. One of the alternatives is irresistible. The Bu- reau believes that the correct conclusion is that he has not accounted by even more than $130,968 for all the in- terest on general balances which he did receive, or could have received, and, in the full discharge of his duty to the public, he should have received and paid over to the County. The presumption is that the amount of money handled by the Treasurer during 1912 was greater than that han- dled by him in 1911 and tliat, therefore, the interest earned during 1912 was greater than that earned in 1911. Notwithstanding this, at the close of 3912 he tendered to the County Board only $162,212.53 as interest on his de- posits of that year. This sum was tendered condition- ally and when the Board declined to waive any claims which the County might have on account of interest re- ceived by him, other than the $162,212.53 tendered, Treas- urer O'Connell refused to pay over to the County even that amount and he still retains it. The Constitution of 1S70 provides that all fees, per- quisities and emoluments of the oflSce of County Treas- urer shall be paid into the County treasury. In a case presenting conditions analogous to those which exist in Cook County, the Supreme Court of the State has de- cided that all interest received on bank deposits is a per- quisite or emolument of the office, to be accounted for and paid over to the County. 14 Chicago Bureau of Pnhlic Efficiency Notwithstanding this plain provision of the Constitu- tion and the manner in which the Supreme Court has interpreted it with regard to interest earnings, the pres- ent County Treasurer of Cook County denies the legal right of the County to interest received on his bank de- posits. His predecessors in office have taken the same position. It is only since 1902 that the County has received any interest on funds deposited by the County Treasurer. The treasurers who have held office since that date have turned over certain lump sums each year, but have in- sisted that they did so in pursuance of pre-election pledges, not because of any legal obligation on their part to make the payments. There never has been any de- tailed accounting with respect to such pajTnents. Not even the rate at which the amount turned in was com- puted has been disclosed. The Bureau recommends to the County Board : 1. That it demand from Treasurer 'Council a full and complete accounting in the matter of interest on bank deposits and of all other fees, perquisites, and emolu- ments of his office, and 2. That in case of his failure to make such an account- ing, the Board institute legal proceedings, not only to compel him to render an account, but to recover such in- terest or other fees, perquisites or emoluments, if any, as he may have failed to pay over to Cook County. County Treasurer of Cook County 15 HOW THE COUNTY TREASURER ADMINISTERS AND ACCOUNTS FOR PUBLIC MONEYS. In administering the public moneys entrusted to his keeping, Treasurer O'Connell maintains two classes of records, — namely, ''public" records and so-called ** pri- vate" records. Both are used to record the financial transactions of his oflSee; both are kept by public em- ployes at public expense. Important entries relative to the receipt of taxes never appear upon the "public" records. The entry of the receipt of millions of dollars of taxes and special assessments collected by him each year is withheld from his ** public" ledgers for long periods after the time when the money is received. The Bureau estimates that of $26,493,422.39 entered of record Decemlx^r 14, 1911, approximately $23,000,0(K) was actually received prior to June 1, 1911 ; and tliat practical- ly all of $2,197,347.70 in railroad taxes put upon the books September 15 was collected prior to May 1. Treasurer O'Connell denies the right of citizens and taxpayers to examine the so-called ''private" records of his office. lie has even refused to permit the County Board to examine any records of his office except his "public" records. By concealing his real transactions with the banks and also the amount of cash received by him daily, the County Treasurer succeeds in preventing not only the tax-pay- ing public, but also the County Board, which is charged with the duty of approving liis accounts, from ascertain- ing whether or not he has accounted for all interest earned on the public funds while they are in his posses- sion. By withholding from the "public" records for long 16 Chicago Bureau of Public E-fJiciency periods entries showing the receipt of moneys collected on account of taxes and special assessments, the Treas- urer keeps the City and other taxing bodies in ignorance of the respective amounts to the payment of which they are from time to time entitled. He thus avoids making remittances to them which they might otherwise demand. Because of the policy of secrecy which surrounds the administration of the Treasurer's office and his refusal to permit an examination of those records of the office which he calls ** private" records but which are kept by public employes at public expense, almost insurmount- able difficulties are met with by citizens and taxpayers seeking information concerning the financial transactions of the office and the manner in which Treasurer O'Con- nell handles public funds. Notwithstanding the enormous sums of public money which the County Treasurer handles, there is absolutely no check or audit of his accounts, except such as may be conducted by himself and his bondsmen. The Bureau takes the position that public business — especially the public business of an official like the Coun- ty Treasurer who is entrusted with the custody of public funds — should be carried on publicly. It is the duty of the County Board to examine and to approve or correct the accounts of the County Treasurer. The conduct of Treasurer O'Connell in refusing to permit the County Board and citizens and taxpayers to examine all of his books and records cannot be too severely condemned. The Bureau recommends that the Board insist upon its rights to examine these accounts and that it take steps immediately to compel Treasurer O'Connell to submit all such accounts and records to a complete and disinter- ested audit. County Treasurer of Cook County 17 REMITTANCES TO TAXING BODIES. In making remittances to the City and other taxing bodies on account of taxes and special assessments col- lected for them, Treasurer O'Connell entirely disregards the plain provisions of the statutes. His policy is to withhold collections until the urgent needs of the taxing bodies for money make it necessary for him to pay it over. The present Treasurer has repeatedly complained of the responsibility which the statutes impose upon him in making him liable for the safe keeping of funds col- lected by him until he pays them over to the taxing bodies. Nevertheless, he has actually increased the burden of tliis responsibility by withholding collections after the time when the taxing bodies were legally entitled to receive them. THE TREASURER'S COMPENSATION. Under the Constitution of Illinois, the County Treas- urer is entitled to receive as his only compensation a sal- ary to be fixed by law which shall not be as much as the lawful compensation of a Circuit Court Judge — at pres- ent $10,000 a year. The Legislature has fixed the Treas- urer's salar}' at $4,000. With the possible exception of his bondsmen, no person but himself knows what the act- ual compensation of the Treasurer is. Admittedly it is many times $4,000 a year. As ex-officio "town collector" of each of the seven Chi- cago towns, he retains $1,500 in commissions — an aggre- gate of $10,500 a year. He also retains two per cent on all inheritance taxes collected by him. In 1911 these com- missions amounted to $20,617.64. During the year 1911, his total admitted compensation, therefore, was $35,- 117.64. 18 Chicago Bureau of Public E-fJiciency Under a recent act of the Legislature, the County treasurers hereafter elected may claim an additional $10,500 in "town collector's" commissions. Inheritance tax fees are steadily increasing, and, if the present prac- tice of retaining them is continued, the Treasurer's ad- mitted compensation may soon exceed $50,000 a year. It is the opinion of the Bureau that the salary of $4,000 a year fixed by the Legislature is the maximum compen- sation to which the Treasurer is at present legally en- titled. It is the further opinion of the Bureau that he has no right to retain either the "town collector's" com- missions or the inheritance tax fees above mentioned. In \^ew of the responsibilities with which the Treas- urer is charged and the amount and nature of the bonds which he is required to furnish, a salary of $4,000 is in- adequate, but this furnishes no excuse for the retention of interest on the public funds or of other fees, per- quisites and emoluments of his office. The County Treas- urer has no right to put his hands in the till and take the public moneys merely because the law does not give him an adequate salary. NEEDED LEGISLATIVE CHANGES. To remedy the conditions at present surrounding the administration of the funds entrusted to the County Treasurer in his several capacities, the Bureau recom- mends the enactment of legislation for the following purposes : 1. To make it mandatory upon the Treasurer to deposit such funds in banks to be designated by the County Board; such deposits to be made upon con- ditions similar to those which now obtain with re- spect to the deposit of the funds of the City of Chi- cago. County Treasurer of Cook County 19 2. To relieve the Treasurer of all responsibility for such funds when he has deposited the same in such banks and while in tlie custody of the banks, and to peiTnit the witlidrawal of the funds from the banks upon the order of the Treasurer only when accom- panied by a warrant or order signed by some other officer to be designated for such purpose. 3. To authorize the County Board to contract for the pajTuent of interest on such bank deposits and to prohibit the County Treasurer, or any other pub- lic official, from retaining any of the interest accru- ing on such deposits, or any profit, perquisite, or emolument on account thereof. 4. To provide for the keeping of proper accounts in connection with tl:o a-officio town collector and to\m supervisor of each of the seven townships (South Chicago, Hyde Park, Lake, West Chicago, North Chicago, Lake View, and Jefferson) which lie wholly within the territorial limits of the City of Chicago. It should not be inferred from the foregoing statement, however, that the County Treasurer holds 16 separate and distinct offices. There is, in fact, but one office — that of County Treasurer. The duties which he performs under the titles of ''county collector," ''town collector," and "town supervisor," respectively, are additional du- ties which the Legislature, without creating any addi- tional offices, has imposed upon the Treasurer. These additional duties are distinct, nevertheless, from the du- ties which he performs as "treasurer," 22 Chicago Bureau of Public Efficiency DUTIES OF TREASURER. As ''treasurer," his duties involve primarily the cus- tody and disbursement of the revenues and funds of Cook County. The Legislature has also required the "treasurer" to act as inheritance tax collector for the State and has designated him as the depositary and cus- todian of certain other funds which do not belong to the County. DUTIES OF COUNTY COLLECTOR. As "county collector," his duties are chiefly those of a collector of delinquent taxes and special assessments which he subsequently turns over to the proper author- ities of the State, County, City, Sanitary District, Park Boards, and other taxing bodies. With the exception of taxes levied on railroad property and on the capital stock of telegraph companies, the warrants for the collection of which are delivered to the "county collector" in the first instance by the County Clerk, all of the moneys which are received by the "county collector" are received on account of delinquent taxes and delinquent special as- sessments. On March 10, of each year, all unpaid general taxes levied on both personal property and real estate become delinquent. On or about that date, the collector's war- rants in the hands of the several township collectors are turned over to the "county collector." Delinquent spe- cial assessment lists are also turned over to him for col- lection by the city, village and other local collectors. These latter lists are usually received by the "county collector" about April 1. Immediately upon the receipt of the delinquent general tax and special assessment books, the "county collector" begins his collections of County Treasurer of Cook County 23 the items which appear thereon and continues to make such collections until the books are closed with the return by him to the County Clerk of what is commonly called "the error and abatement list" — a list of those items which for various reasons he has been unable to collect. The funds handled by the "county collector" consist largely of voluntary pajTnents made to him on account of current taxes and special assessments, and the proceeds of the sale of real estate sold by him for the purpose of enforcing the pajTnent of general taxes and special as- sessments levied against such real estate. Relatively smgjl amounts come into his hands through the voluntary payment or enforced collection of personal property taxes levied prior to the tax which is currently in collection, and also through the redemption of real estate from for- feitures on account of both delinquent general taxes and si>ecial assessments. DUTIES OF TOWNjJCOLLECTOR. As "town collector," the Treasurer's duties are sim- ply those of a collector of current general taxes levied on both real and personal property. As "town collector" he begins to receive such taxes as soon as the collector's warrants are turned over to him by the County Clerk — usually early in January — and continues his collections until March 10, when as "county collector" he goes through the formality of settling his accounts with him- self as "town collector" and as "town collector" turns over the books to himself as "county collector." The taxes which he collects as "town collector" he subse- quently turns over to the State, County, City, Sanitary District, Park Boards, and other taxing bodies. 24 Chicago Bureau of Public Efficiency DUTIES OF TOWN SUPERVISOR. As "town supervisor," the Treasurer is custodian of certain moneys raised by the towns of Lake View and North Chicago for the acquisition and maintenance of the small parks under the jurisdiction of the Lincoln Park Board. These are the only duties which he performs as ''town supervisor" which are at all pertinent to the subject matter of this report THE TREASURER'S CONTROL OF PUBLIC FUNDS. The County Treasurer is charged by law with the duty of receiving and disbursing public moneys in accordance with the provisions of the statutes. There are no laws, however, governing the disposition of the funds while they are in his custody. He may lock them up in his own vaults or in other depositories, or he may deposit them in the banks at interest, or not, at his option. His power of control over the funds, during the period that they are in his custody, is absolute. On the other hand, his liability to keep them safely and to disburse them properly is also absolute. The Legislature has never made any provision by which, pending the final disburse- ment of the funds, he can relieve himself of any part of this responsibility. The situation above described contrasts sharply with the conditions under which the City Treasurer of Chicago administers the funds entrusted to him. The City Coun- cil is authorized to designate the banks in which City funds shall be deposited and to contract for the payment of interest on the deposits. The banks designated by the Council are required to furnish bonds to the City, and when the City Treasurer has deposited City funds in any County Treasurer of Cook County 25 such bank he is thereby discharged from all responsibility for the moneys thus deposited. After City funds have been once deposited, they can be withdrawn on the treas- urer's check only when accompanied by the city comp- troller's warrant for the amount. Neither the City Treas- urer nor any other city oflficer is permitted to retain any of the interest accruing on bank deposits. The provisions made by the Legislature for the cus- tody of City funds not only relieve the City Treasurer of the very heavy responsibility imposed upon the County Treasurer, but they insure publicity with respect to the manner in which the funds are handled and proper ac- counting for the interest earned thereon. Similar legis- lation should be enacted with respect to the administra- tion of funds entrusted to the County Treasurer. THE BONDS REQUIRED OF THE COUNTY TREASURER. During the fiscal year 1911, the County Treasurer han- dled a total of approximately $55,000,000; the largest amount of money subject to his control at any one time probably did not exceed $25,000,000. As security for these funds he was required to furnish two bonds aggre- gating in amount $11,000,000, with personal sureties in each case. Treasurer 'Council has stated that, in order to obtain these personal bondsmen, he was obliged to in- demnify them against loss by giving a surety company bond for $750,000, the premium upon which he was re- quired to pay out of his personal funds. The City Treasurer of Chicago handles about $70,- 000,000 annually. The average daily balance of City funds on deposit is estimated at approximately $17,000,- 000. Since 1907, and until within the past few months, a 26 Chicago Bureau of Public E-fJiciency bond of only $2,000,000 has been required of the City Treasurer. This bond has been furnished by a surety company and the City has paid the premium. The rela- tively small amount of this bond has been due to the fact that the City Treasurer has been required to deposit City funds in the banks designated by the City Council, and when he has done so his responsibility for the money has ended. There has been no occasion, therefore, for re- quiring a bond of the size furnished by the County Treas- urer. Such additional security as the safety of the funds required has been furnished by the banks holding them. So far as the general corporate fund is concerned, the situation just described still obtains. Within the last few months, however, the City Treasurer has given an additional bond for $3,000,000 with personal sureties. The reason assigned for the giving of this additional bond is that the Legislature has made no provision for depositing school funds in the banks. The school funds, therefore, are deposited by the City Treasurer on his own responsibility, which continues to exist until he dis- burses them or turns them over to his successor. Manifestly, the policy adopted by the City with respect to the responsibility with which the City Treasurer shall be charged and the amount of bond to be required of him is superior in every way to that pursued in the case of the County Treasurer with respect to the same matters. THE TREASURER'S COMPENSATION. The Constitution of 1870 provides that the County Treasurer of Cook County shall receive, as his only com- pensation for his services, a salary to be fixed by law, which shall not be as much as the lawful compensation County Treasurer of Cook County 27 of a Judge of the Circuit Court. The salary of a Circuit Court Judge is now $10,000. The Constitution provides further that all fees, perquisites, and emoluments, above the amount of said salary, shall be paid into the County treasury. In pursuance of this provision of the Constitution, the Legislature has fixed the Treasurer's salary at $4,000 a year, but no person other than the Treasurer himself, with the possible exception of his bondsmen, knows how much the total compensation of the oflfice actually amounts to. Admittedly, it is many times $4,000 a year. As "town collector" of each of the seven Chicago townships, he retains $1,500 in commissions — an aggregate of $10,- 500 a year. He also retains two per cent on all inher- itance taxes collected by him. In 1911, these commis- sions amounted to $20,G17.G4, so that during tliat year his total admitted compensation was $35,117.64. Under a recent act of the Legislature, County Treasurers hereafter elected may claim an additional $10,500 in "town collector's" commissions. Inheritance tax fees are steadily increasing and if the present practice of re- taining them is continued, the Treasurer's admitted com- pensation may soon exceed $50,000 a year. The Supreme Court of this State has decided that the Legislature, in making the Treasurer ex-ofjicio "county collector," did not create another oflSce, but simply im- posed additional duties upon the Treasurer; therefore, the commissions provided by law for the "county col- lector" are fees of the Treasurer's oflfice which, under the constitutional provision referred to, he is prohibited from retaining for his own use. The courts have not passed on this question with respect to the "town col- 28 Chicago Bureau of Public Efficiency lector's" commissions, but the foregoing principles and reasoning seem applicable to them and seem to bar the legal right of the Treasurer to retain any part of the $10,500 'Hown collector's" commissions now retained by him. The inheritance tax act authorizes the Treasurer ''to retain two per cent on all taxes paid and accounted for by him under this act, in full for his services * * * in addition to his salary or fees now allowed by law." Clearly, the commission thus provided for is not a ''sal- ary," which the Constitution requires shall be fixed by law as the only compensation to which the Treasurer shall be entitled. Moreover, if in effect this section of the inheritance tax act authorizes the Treasurer to retain compensation in excess of the maximum allowed by the Constitution, the section would seem to be plainly uncon- stitutional. A more reasonable interpretation of the sec- tion is to regard the commissions authorized as fees of the Treasurer's office to be turned into the County treas- ury. Such a construction has been adopted by the Su- preme Court in an analogous case concerning fees author- ized for the State Treasurer. That the County Treasurer personally is not entitled to such commissions seems scarcely open to controversy. It is the opinion of the Bureau that the salary of $4,000 a year fixed by the Legislature is the maximum compen- sation to which the Treasurer is at present legally en- titled. In view of the responsibilities with which he is charged and the amount and nature of the bonds he is required to furnish, such a salary is inadequate. It should be raised to the maximum which may be allowed by the Constitution of the State. County Treasurer of Cook County 29 NEZDEX) LEGISLATIVE CHANGES. To remedy the conditions at present surrounding the administration of the funds entrusted to the County Treasurer in his several capacities, the Bureau recom- mends the enactment of legislation for the following pur- poses : 1. To make it mandatory upon the Treasurer to deposit such funds in banks to be designated by the County Board ; such deposits to be made upon condi- tions similar to those which now obtain with respect to the deposit of the funds of the City of Chicago. 2. To relieve the Treasurer of all responsibility for such funds when he has deposited the same in such banks and while in the custody of the banks, and to permit the withdrawal of the funds from the banks ui>on tlie order of the Treasurer only when accompanied by a warrant or order signed by some other officer to be designated for such purpose. 3. To authorize the County Board to contract for the payment of interest on such bank deposits and to prohibit the County Treasurer, or any other public official, from retaining any of the interest accruing on such deposits, or any profit, perquisite or emol- ument on account thereof. 4. To provide for the keeping of proper accounts in connection with the administration of such funds and the interest thereon; for the examination and audit of such accounts by a disinterested officer or agency; and for an adequate degree of publicity con- cerning the manner in which such funds are handled and all of the records and accounts thereof kept. 5. To make suitable provisions concerning the nature and amount of the bonds to be furnished by the Treasurer. 6. To provide definite and adequate compensation for the Treasurer. 30 Chicago Bureau of Public Efficiency In order that legislation of the nature above recom- mended may be enacted so as to become effective at the time that the next County Treasurer takes office, the Bu- reau recommends to His Excellency, Governor Edward F. Dunne, that in case he shall convene the Legislature in special session he include the subject of such legisla- tion among the matters to be considered at such special session. THE MANNER IN WHICH THE FUNDS ARE HANDLED AND THE ACCOUNTS THEREOF KEPT AND AUDITED. In November, 1911, the Bureau decided to undertake an investigation of the Treasurer's records and accounts for the purpose of ascertaining, if possible, how the pub- lic funds in that office were being handled and whether or not the interest thereon was being accounted for. The decision to make such an investigation was prompted in part by the fact that on several occasions previous to that time Treasurer O'Connell had denied the right of tax- payers and citizens to inspect the books and records of his office, and had stated to officials of tlie Bureau that he would not permit an examination of his books of account, especially his ledger accounts, because such an examina- tion might disclose information which he did not wish to become public. PERMISSION TO INSPECT BOOKS DEMANDED BY BUREAU TRUSTEES. The Trustees of the Bureau took the position that pub- lic business — especially the public business of an official like the County Treasurer, who is entrusted with the col- lection and custody of public funds — should be carried on publicly. They were of the opinion, moreover, that the Treasurer was legally obliged to open his books and records to the inspection of citizens and taxpayers under reasonable conditions. Acting on this latter assumption, four of the Trustees of the Bureau — Julius Rosenwald, Onward Bates, Charles R. Crane, and Henry B. Favill — 32 Chicago Bureau of Public E-fficiency went in person to the office of the Treasurer, and, as citi- zens and taxpayers, made a formal demand upon Mr. O'Connell for permission to examine his books. When this demand was made, Mr. O'Connell receded from his' former position to the extent of saying that the ** public" records of the office might be inspected. INSPECTION OF THE "PUBLIC" RECORDS PERMITTED— WHAT THEY DISCLOSED. In complying with the demand of the Trustees of the Bureau, Mr. O'Connell turned over to its accountants two separate sets of books. One purported to contain his ac- counts as 'treasurer"; the other, his accounts as both ''county collector'* and "town collector." Each con- sisted of a general ledger with its accompanying cash book and journal. The most superficial inspection of the ''public" records at once disclosed that the office must keep other rec- ords, particularly in connection with the "collector's" accounts. To illustrate : The books showed that millions of dollars in tax collections had been paid over to the several taxing bodies of the county before any entries appeared on these "public" records to indicate that the collections had been made. Ultimately, the Bureau accountants discovered certain supplemental records and became acquainted with the na- ture of their contents. The accountants were refused access to these other records, however, so far as being permitted to draw off detailed data therefrom was con- cerned, on the ground that the supplemental records were not "public" records. County Treasurer of Cook County 33 The "public" records in question contained no entries showing the Treasurer's accounts with the banks, and the only entry relative to interest on bank deposits, which appeared anywhere in the books, was an item of $145,- 157.39 on December 21, 1911. This amount represented the $150,557.39 reported to the County Board, less $5,400 arbitrarily deducted for ** attorneys' fees." Moreover, Mr. O'Connell informed the officials of the Bureau that neither in his office nor elsewhere did he keep any books or records showing either his interest or deposit accounts with the banks. This statement is incredible. THE "TREASURER'S" RECORDS AND ACCOUNTS. In the "treasurer's" general ledger are carried all ac- counts of Cook County funds, the accounts of State in- heritance tax collections, and the accounts of deposits made in connection with condemnation proceedings. Sev- eral other minor accounts, representing funds of which the County Treasurer is the custodian, are also carried in this ledger. In addition, this ledger contains ac- counts of the Treasurer, acting as "eoc-officio supervisor" of the towns of North Chicago and Lake View, which show a part of his transactions in connection with the small park bond and maintenance funds of those towns. During the period covered by this report (December 5, 1910, to December 21, 1911,) the total receipts of the County Treasurer in his several capacities were $55,- 198,887.77 ; the disbursements were $51,457,566.99. These amounts included (a) the balance on hand December 5, 1910, and (b) transfers between funds. Of these amounts, 34 Chicago Bureau of Piihlic Efficiency $13,575,162.75 and $11,454,622.14, respectively, were cov- ered by entries in the ''treasurer's" ledger. The follow- ing table shows in summarized form on what accounts the latter amounts were received and disbursed. County Treasurer of Cook County 35 f 2 •5 e ^ iALANCB .21, 1911 CM S 2;^ i^8 g 3 '^ s c/ cc r-. t- -5 Ti t- ^* i d CM m g cm" s {2§ CC --'»•-- Q t^ ■^ C C r^ Li »-t c^i s -J* 5C — — *1 — -^ — ^. S :» c-r 00 •7: s 5 ''1 •» • «• s 00 W 00 S^^:^?*^^ 05 g 00 -r cm' 95 in -« — t- c >': 2 •^ M « SSx"? ^'iz^t^^'^n »n QC C5 CM 5 ^__t- ri a --■ M» it t>.5S8 i:S5SS8S:5 S •* b- I t- CM t^r>. m — — t- « « 30 ri — ac 1^ -r jg 1 H c _ -^ -. t- 55 W H (Si fcC CC w c^ CM CM* 253?§ SS2:ol5S;3 s s"» in C5 S X c; c C = a^ 3C — S — t'- "T f^ »n x_ 3C_ c;_ X 0, -^ 00 d V ^M !>■ t>. z 05 oc«n — ■"»■ t>^ rt C5 r-" r-" cT ^" c-r cT -^ -TO-- g CM ri ?j 5 'H (Si a «• •» «• . i . . ■0 . . a • • I ■■ : >. :-3 .t: : a. 9 ■ c -lis i 5a D c c u. CO Q Sec £ aJ ej Si I a C c z c s'- c S.iitl JH z z z ?- I 2 £? a: > u a z < & 2 2^'-' rX c 5 C * CJ f- X •" u ± UI MM ss H s z = >. 2 5 = c MO I Z I * 5 -< 5 5- 1— C h a *:: H 36 Chicago Bureau of Public E-fJiciency The $8,623,727.73 shown in the preceding table as re- ceipts credited to the Cook County General Fund was made np of the following items : *Town Collectors' Commissions $ 178,554.85 **Tax Collections 3,738,662.19 **County Collector's Commissions 409,622.14 **Penalties on Delinquent Taxes 113,663.24 **Surplus Costs Collected on Account of Tax Sales 10,762.41 fTax Loans 2,895,000.00 $Fee Office Collections 1,066,938.86 Interest on Bank Deposits 145,157.39 Miscellaneous Receipts 2,238.88 Transferred from New Hospital and Infirmary Fund 63,127.77 Total $8,623,727.73 •Deducted from tax collections made for taxing bod- ies in seven city towns by "town collector." (Includes $10,489.94 salary retained by Treasurer as eoo-officio "town collector.") **The amounts included in these items appear as lump sums received from time to time by the Treasurer, in his capacity as such, from himself acting as "county collector." fBorrowed from banks. JPaid over to Treasurer by county fee officers. The receipt and disbursement of Cook County funds. State inheritance tax collections and condemnation de- posits include the most important transactions of the "treasurer's" office. Cook County funds come to his hands chiefly in the form of lump sums, being (a) transfers from himself as "collector," (b) remittances by the several county fee officers, (c) loans from the banks in anticipation of fu- County Treasurer of Cook County 37 ture tax collections, and (d) proceeds from bond sales. The nature of the transactions involved in the receipt of these County funds is such that no extended considera- tion of them is called for in this connection. The ques- tion of the manner in which the ''collector's" funds are handled and accounted for prior to their transfer to the "treasurer's" records will be discussed in connection with the "collector's" accounts. The fee office receipts are audited in detail by the Comptroller on whose war- rant they are paid to the Treasurer. So far as the Bureau accountants were able to ascertain, disbursements of County funds (except in the case of "town collect- ors' " commissions and salary and the attorneys' fees de- ducted from the item of interest on bank deposits) were made on warrants drawn by the Comptroller after ap- proval by the County Board. The accounts relating to Cook County funds were checked with the Comptroller's records and were found to agree therewith. Inheritance taxes collected from the estates of de- ceased persons are accounted for directly to the State officials. Condemnation deposits, as the item indicates, grow out of proceedings for the condemnation of real estate for public or quasi-public use and the money deposited is ultimately paid over, in accordance with the judgment of the court, to the persons whose property is taken through tlie proceedings. Small park bond and maintenance funds, which the Treasurer handles as ex-officio "town supervisor" of North Chicago and Lake View, are derived from the sale of bonds and from tax collections. They are disbursed under the direction of the Lincoln Park Board. Entries in the "treasurer's" ledger are posted from a 38 Chicago Bureau of Public Efficiency cash book and journal. The accountants of the Bureau were refused any information as to the form or nature of the data furnished the bookeepers operating the cash book and journal, but apparently these books are books of original entry. The entries therein which were exam- ined would indicate that they had been made currently from day to day in the ordinary course of business. A complete audit of the *' treasurer's" accounts would involve an examination of the data supporting the en- tries in the cash book and journal. It is the opinion of the Bureau that such data should be open to public in- spection under reasonable restrictions. So far as the books themselves are concerned, however, there was noth- ing on their face to indicate any irregularity in their keeping, but, since the Bureau was denied access to the data supporting the entries, it is not in a position to state whether or not they are susceptible of complete audit. THE "COLLECTOR'S" RECORDS AND ACCOUNTS. So far as the accountants of the Bureau have been able to ascertain, the financial records of the Treasurer kept in his capacity of (a) ' 'county collector" and (b) **town collector" of the seven Chicago towns consist of: 1. The ** collector's" GENERAL TAX WARRANTS. TheSC are books prepared by the County Clerk. They show not only the aggregate amount of tax levied against each person or piece of real estate but also the distributive share to which each taxing body interested therein is entitled. The books are numbered consecutively from one upward. Some time after each collection has been made, the name of the party paying the item and the amount and date of payment are entered in a column provided for that purpose. County Treasurer of Cook County 39 2. The delinquent special, assessment lists returned to the "county collector" by the local collectors of the several municipal corporations throughout the county. The lists returned by each local collector show the num- bers of the warrants for collection issued to him; also the amount of each assessment or installment thereof to be collected by the "county collector," and the interest accrued thereon to April 1. A column is provided on each list in which the name of the party paying each item and the amount and date of payment are entered by the "county collector" after he has received the amount returned for collection. The "Collector's" So-Called "Private" Records. 3. The tellers' daily cash collection sheets. When collections are made on account of either general taxes or delinquent special assessments, the amounts received are immediately distributed on one of these sheets by the receiving teller's assistant in accordance with the fol- lowing classification: A. General tax. (1) Tax; (2) Interest; (3) Costs. B. City special assessments. (1) Assessment; (2) Interest; (3) Costs. C. Country special assessments. (1) Assessment; (2) Interest; (3) Costs. D. Boulevard and park special assessments. (1) Assessment; (2) Interest; (3) Costs. The amounts entered on these sheets are totaled, and, at the close of each day's business the tellers' cash is balanced against the totals shown on the sheets. 4. A file of duplicate bills. All general tax and spe- cial assessment bills are made in duplicate. As each 40 Chicago Bureau of Public Efficiency general tax bill is made, the number of the warrant book is placed thereon. Special assessment bills bear the num- ber of the warrant issued to the local collector. When collections are made, the duplicate bills are retained by the receiving tellers who send them to the auditing di- vision. There they are sorted in accordance with the warrant numbers appearuig on them, and the total amount collected each day on account of each warrant is ascertained by footing the items on all of the dupli- cate bills bearing the same date and warrant number. 5. The auditor's ledgees. The accounts in these ledg- ers are designated by numbers which correspond to the numbers of the general tax and special assessment war- rants certified to the ''collector" for collection. Each ledger account shows the total amount of tax or assess- ment certified for collection in the warrant bearing the corresponding number, and each day, as collections are made, the total amount collected on account of any war- rant is posted to the ledger account designated by the number of that particular warrant. The ''Collector's" ''Public'' Records.* 6. The general ledger, cash book and journal. The books which the ** collector" terms his ''public" records and which the accountants of the Bureau were permitted to examine consist of a general ledger with its accom- *The general tax warrants and delinquent special assessment lists described on pages 38-39, consisting''each*year of about 500 large books, are public records. When entries therein have been completed, these books show separately the amount of each item collected Because of the form in which they are required to^be" kept," however, they are of no practical use to any one desiring to determine at'any time either the status of the "collector's" cash account or the status of his accounts with the different taxing bodies; nor are they "of any practical use to any one wishing to deter- mine the amount of money'received'on'any given day, or during any given period. Therefore, in the'diacussion which follows relative to the "col- lector's" "public" records "and "accounts/lthese^warrant. books have not been taken into consideration. County Treasurer of Cook County 41 panying cash book and journal. In these books are rec- orded the ultimate facts relative to the transactions of the "collector" with each of the taxing bodies within the county. In the case of the seven Chicago towns where the Treasurer acts as both "county collector" and "town collector," but one account with each tax- ing body is used in recording his transactions ifi both capacities. The ''Public" Records—What they Showed. The public records submitted for inspection showed entries covering (a) Costs collected on delinquent general tax and special assessment bills, (b) Delinquent special assessments collected for the City of Cliicago, (c) All remittances to the several taxins: bodies on account of both general taxes and special assess- ments collected for such bodies. These entries apparently had been made from day to day in the ordinary course of business. To this extent the books seemingly set forth bona fide transactions as they occurred. This was not true, however, of the en- tries which purported to show cash received by the "col- lector" from the following sources: (a) General tax collections. (b) Delinquent special assessments other than those returned by the City of Chicago. (c) Interest penalties collected on dehnquent general taxes. The "public" records showed no accounts with banks or other depositaries, and there were no entries in these records indicating what disposition had been made of the public funds during the time that they were under the control of the "collector." 42 Chicago Bureau of Public Efficiency Cash Receipts Withheld from '' Public" Records. With respect to cash received on account of general tax collections, the practice was not to show its receipt upon the '' public" records until the distributive share of each taxing body in certain aggregate amounts collected had been determined. When these distributive shares had been ascertained, entries were made crediting each taxing body with its respective share. At the same time the "collector" charged himself, through an entry in his cash account, with the aggregate amount of such credits. These entries in the cash account, therefore, while they purported to show the receipt of cash on the dates under which they appeared, in fact, constituted the first public acknowledgment by the ''collector" that he had received cash, the greater part of which in most in- stances had been in his hands for considerable periods before the entries were made. During the year 1911, charges of the foregoing nature were made to the ''collector's" cash and the correspond- ing credits were shown in the accounts of the several taxing bodies on but seven different dates. The follow- ing table shows the dates upon which these entries were made, the nature of the collections covered by each entry, and the aggregate amount charged to cash in each in- stance. County Treasurer of Cook Comity 43 Table Showing Dates and Amounts of Entries on the "Collector's" Cash Account During the Year 1911; Also the Nature of the Items Covered by Each Entry. Date of Entry Collections Covered by Entry Aggregate Amount Charged to Cash March 18, 1911, April 10, September 15, November 8, November 9, November 13, December 14, "Town collector's" collections up to March 10, in seven city towns State taxes collected in part by country' town collectors and in part by "county collector". . Railroad taxes Collections of taxes of prior years, forfeiture re- demptions, etc Taxes (other than railroad taxes, taxes for prior years, etc.,) received by "county collector" between March 10, and December 15, 1911 Total $ 8,729,055.07 189,619.64 2,197,347.70 147,210.98 3,410.39 9,591.63 26,493,422.39 $37,709,657.80 Obviously, the above amounts were not received as lump suras on the dates shown. \Miat these sums really represent are tax collections made months before and withheld from the *^ public" records until the dates shown. Of the $26,493,422.39, entered December 14, it is estimated that more than $23,000,000.00 was collected prior to June 1. In addition to the amounts represented by the fore- ij^oing items, during the year 1911 the ''collector" re- ceived from general tax collections the aggregate amount of $3,548,809.83. This sum represents a part of the dis- tributive share of Cook County in the aggregate of gen- eral tax collections. No entries showing either its re- ceipt or disbursement appeared on the "collector's" books. On those records it was neither credited to the County as the distributive shares of other taxing bodies 44 Chicago Bureau of Public Efficiency were credited, nor was it charged to cash as the entries in the preceding table were charged, and, therefore, it is not included in those items. The sums forming this ag- gregate amount appeared, however, on the "treasurer's" books as charges to cash on account of general tax col- lections. The following table shows the amounts of these several sums and the date of entry on the ' ' treasurer 's ' ' books ; Date Amount February 27, 1911 $ 198,687.50 April 17 139,200.00 May 16 136,000.00 May 31 125,500.00 June 21 2,356,450.00 June 21 97,000.00 June 29 125,000.00 August 7 325,000.00 September 27 45,700.00 December 20 272.33 $3,548,809.83 This sum of $3,548,809.83 represents, in the aggregate, a part of the share of the County in each of a very large number of separate tax collections made from day to day, beginning about January 10. Although much of this money was in the "collector's" possession long prior to the date of the respective entries on the "treasurer's" books, these entries constituted the first public record of the fact that it had been received. Cash received on account of delinquent special assess- ments other than those returned by the City of Chicago was entered on the "collector's" books in substantially the same manner as cash received from general tax col- lections. The following table shows the dates upon which the respective amounts appearing therein were charged County Treasurer of Cook County 45 to the cash account, and also the periods during which the several sums were collected. As in the case of gen- eral tax collections, these charges to the cash account constituted the first public record of the fact that the money had been received, although in these cases the entries themselves evidence the fact that the money had been in the "collector's" possession for a considerable period. Table Showing Amount of Special Assessment Collections (Other than City of Chicago) Received by "County Collector"; also Periods During Which the Several Amounts were Collected and the Dates when they were Entered on "Collector's" "Public" Records. Date of Entry on "Collector's' Records Periods During which Collections were Made Amount May 8, 1011.. June 21 July 12 August 8 August 17. ... September 12. September 12. October 16. . . October 21. . . , November 8. . December 14. . April 1, to April 15, 1911 April 16, to April 30 May 1 , to May 15 May 16, to May 31 June 1, to Juno 15 June 16, to June 30 July 1, to Julv 15 July 16, to July 31 August 1, to August 31 .September 1, to September 30. October 1, to December 15. . . Total. % 22,671.83 64,54-1.46 187,612.76 32,371.71 26,603.24 23,534.01 28,818.88 39,502.98 74,002.76 46.638.63 152,063.92 $698,365.18 Certain other entries showing small amounts collected on account of special assessments appeared as charges to cash during the year, but they covered items of such minor importance that they have been omitted from the table. Penalties in the form of interest at the rate of 1% a month which were collected from day to day, beginning May 2, on delinquent general taxes were not entered on the ''collector's" ''public" records at all. In 1911 the 46 Chicago Bureau of Public Efficiency amount accounted for aggregated $113,663.24. The sev- eral sums aggregating this amount appear on the 'treas- urer's" books as cash received from this source on the dates shown in the following table : Date Amount June 30, 1911 $ 22,810.94 July 31 22,760.64 August 31 26,585.80 September 29 22,798.22 October 31 6,000.00 December 21 12,707.64 $113,663.24 This case again illustrates how funds were collected but not put upon the "public" records from day to day in the usual course of business. Conditions Resulting from the Manner in Which the Accounts Are Operated. The manner in which the '' collector" keeps his ac- counts, the distinction which he makes between those records of his office which he terms ''private" and those which he terms "public," and his refusal to concede the tax-paying public the right to inspect the so-called "pri- vate" records operate to bring about the following con- ditions : 1. For long periods after the time when the money is actually received by the "collector," the entry of the receipt of millions of dollars of public moneys col- lected by him each year is withheld from what he terms his "public" records. It is estimated that of the $26,- 493,422.39 shown in the table on page 43, which was placed of record December 14, 1911, approximately $23,- County Treasurer of Cook County 47 000,000 was actually received prior to June 1, 1911, and that practically all of the $2,197,347.70 of railroad taxes shown on September 15 was collected prior to May 1. 2. By withholding from the ''public" records entries showing the receipt of moneys collected on account of taxes and special assessments, and at the same time by neglecting to credit the accounts of the different taxing bodies throughout the county with collections made for them, except at such widely separated dates as appear in the tables on pages 43-45, the "collector" can keep the taxing bodies in ignorance of the respective amounts to the pajTnent of which they are, from time to time, entitled. He thus avoids making remittances to them which they might otherwise demand. This point is of special significance in view of the tardy manner in which he remits funds to all of the taxing bodies. The entries appearing in the account of the City of Chicago for the year 1911 are shown in the following statement. They are typical of the entries in the ac- counts of other taxing bodies, and illustrate the manner in which the collections and disbursements made by the "collector" are entered uj^on the "public" records of the office. It ^^^ll be noted that the $5,586,768.35 credited to this account on March 18 was not entirely paid over to the City until April 28. Of the $17,767,766.67 cred- ited on December 14, the Bureau estimates that more than $15,500,000 was actually collected prior to June 1. Because of the failure to credit the City with the latter amount until December 14, it appeared from the face of the "collector's" books that during the greater part of the year the City was heavily indebted to the "collector" for cash advanced, while the fact was that during the en- 48 Chicago Bureau of Public Efficiency tire time the ''collector" was actually withholding from the City funds to which it was entitled. Statement of Account of County and Town "Collector" with City of Chicago for 1911, Showing Dates and Amounts of Payments Made to City; Also Amounts Collected for City on Account of General Taxes and Dates when Same were Entered on the "Collector's" "Public" Records. Date Payments to City Taxes Collected for City February 24, 1911, March 18, March 24, April 18, April 28, May 16, May 29, June 19, June 29, July 17, July 27, August 17, August 21, August 28, September 16, September 29, October 18, October 30, November 17, November 28, November 29, December 16, December 19, December 22, $ 550.000.00 * 111,735.36 472,499.69 1,971,410.35 3,000,000.00 2,750,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 * 41,762.59 1,000,000.00 971,690.32 1,250,000.00 1,250,000.00 1,250,000.00 1,250,000.00 750,000.00 1,250,000.00 * 189,568.46 400,000.00 84,948.20 $24,543,614.97 March 18, t$ 5,586,768.35 Sept. 15, tt 1,102,921.24 November 8, ttt 83,345.04 9, ttt 1,689.94 " 13 ttt 1 123.73 December 14,'tttt 17,767 i766]67 $24,543,614.97 * "Town collector's" commissions. ** County Clerk's extension fees. *** "Coimty collector's" commissions, t Collections made by "town collector" January 10, to March 10. tt Railroad taxes. ttt Taxes prior years, forfeiture redemptions, etc. tttt Collections by "county collector" March 10, to December 15. 3. By concealing his accounts with the banks and also the amount of cash received by him daily in his capacity as ''collector," the County Treasurer has succeeded in County Treasurer of Cook County 49 preventing not only the tax-paying public but also tlie County Board, which is charged with the duty of ap- proving his accounts, from ascertaining whether or not he has accounted for all interest earned on the public funds while they are in his possession. The important part which the practice of concealing daily cash receipts plays in preventing an effective check on interest earnings is apparent. Both the amount re- ceived and the length of time that the money is retained by the Treasurer are essential factors in computing in- terest. Data as to the aggregate amount received are of little or no value unless supplemented by data as to when the money was received and paid out. In this connection, attention is directed to tlie fact that the interest figures presented in this report are based upon estimated daily cash receipts. Tlie Bureau was forced to resort to the method of estimating, described on pages 62-65, because of the refusal of the Treasurer to furnish any definite data as to when the money collected by him was received. REMITTANCES TO TAXING BODIES. The Kevenue Act provides that every 30 days town collectors shall account for and pay over taxes collected by them. The Revenue Act also provides that the "county col- lector" shall file a statement of his collections \vith the County Clerk, on or before April 10, of each year, and that on or before April 15, he shall pay over the amount shown in such statement. The Act provides further that the "county collector" shall report and pay over to cities and other local taxing bodies delinquent taxes and spe- cial assessments collected by him "at least once in every 10 days when demanded by the proper authorities." 50 Chicago Bureau of Public Efficiency The foregoing provisions of the statutes are disre- garded altogether by the ''county collector" of Cook County and the ''town collector" of the seven Chicago towns. The policy with respect to remitting such collections has been for the "collector" to hold the money just as long as he could safely do so, while the authorities of the several taxing bodies have "bargained" with him as best they could in order to get the funds which he was unlawfully withholding. In some cases, particularly those of the City of Chicago and the South Park Board, pajTuents are made in accordance Avith a prearranged schedule. The; West Park Board and the Lincoln Park Board receive their shares as their needs become urgent, while many of the smaller outlying taxing bodies receive no money at all until the date of final distribution in December. The heavy responsibility imposed upon the Treasurer with respect to the safe keeping of funds collected by him, both as "county collector" and as "town collector," was pointed out in the previous pages of this report. The present Treasurer has repeatedly complained of the burden of this responsibility. Nevertheless, he has not taken advantage of the opportunity which he has to re- lieve himself of this responsibility by turning the collec- tions over to the authorities entitled to receive them. On the other hand, he has actually increased his burden of responsibility by withholding the moneys after the tax- ing bodies were legally entitled to receive them. County Treasurer of Cook County 51 THE AUDIT OF THE TREASURER'S ACCOUNTS. Notwithstanding the enormous sums of public money which the Treasurer handles, there is absolutely no audit of his accounts except such as may be conducted by himself and his bondsmen. By the terms of the statute, he is required to account to the County Board, and in a perfunctory way he does file accounts as "treasurer." He is required also to submit a statement of his accounts as "collector" to the County Board for its approval or correction. In the face of these explicit statutory requirements, the present Treasurer has denied the County Board ac- cess to his records for the purpose of checking up his accounts and so far as the Board has attempted to dis- charge the duties imposed upon it, it has gone through tlie empty formality of approving the accounts without having examined the records from which they were made up. The conduct of Treasurer 'Council in refusing to per- mit an audit of his books by the County Board cannot l)e too severely condemned. The Bureau recommends that the Board insist upon its right to examine his ac- counts and records, and that it take steps immediately to compel him to submit all such accounts and records to a complete, thorough, and disinterested audit. THE QUESTION OF INTEREST ON FUNDS IN THE CUSTODY OF THE COUNTY TREASURER. Prior to the administration of John J. Hanberg as County Treasurer, which began in December, 1902, it bad been the practice of the incumbents of that office to retain for their own use the interest on public funds in their custody. At the close of each of the four years during which he held the office, Mr. Hanberg, in pursuance of certain pre-election pledges, turned into the County treasury a certain sum as interest earned on the funds in his cus- tody during that year. John B. Thompson, Hanberg's successor, before his election also pledged himself to turn over the interest on his bank deposits, and each year while in office made certain interest payments to the County. In December, 1910, the present County Treasurer, Wil- liam L. 'Council, came into office, having previously made pledges similar to those made by Hanberg and Thompson, and, following the example set by them, in December, 1911, he accounted to the County for $150,- 557.39 as interest earned during the first year of his administration. 54 Chicago Bureau of Public Efficiency The amounts of the several interest payments made by the three treasurers above mentioned are shown in the following table : Treasurer Year Amount John J. Hanberg 1902—1903 $ 67,402.61 " " " 1903—1904 73,021.77 <( (( 11 1904—1905 73,138.80 (< (( (( 1905—1906 88,113.33 John R. Thompson 1906—1907 123,762.84 It K (1 1907—1908 126,837.50