prepare and report to the National Municipal League, or its Executive Committee, such methods or systems of municipal accounting and collection of municipal statistics as it may find to be most desirable.

The resolution was adopted by an unanimous vote excepting that of Mr. William P. Bancroft, of Wilmington, Delaware, who said that he thought it was impracticable to do much of anything in that line and that therefore he would vote no.

THE CHAIRMAN:

The next paper will be on the subject of "Commercialism in Politics," by Mr. Bird S. Coler, Comptroller of Greater New York, which will be read by Mr. C. E. Monroe, of Milwaukee, as Mr. Coler is unable to attend.

Mr. Monroe read Mr. Coler's paper on "Commercialism in Politics." (See Appendix.)

MR. FOULKE: I have been very much interested in the papers and the discussion regarding a uniform system of accounting and I ought perhaps to state what has been done in that respect by our own State of Indiana. We had a commission appointed, as I mentioned to the Conference a year ago, to undertake the complete reconstruction of our county and township business all over the state. There were three bills that were prepared by that commission, one of which provided for a county and legislative council which should pass upon all of the estimates which were made, and all contracts, and provided many safeguards against injudicious expenditures. Another did the same thing in regard to township matters, where we have had practically an autocratic system. We introduced those two bills and also another one providing for a state audit of accounts, very similar to the state examinership in Wyoming, but there was this difference, that there was no special new official that was created for the purpose, but it was provided that the State Auditor should formulate the system of accounts, which should be uniform for all the counties and townships of the state, and that he should also appoint a special deputy, an appropriation being made for that purpose, whose duty it should be to visit without notice the different counties of the state and to examine their accounts, as well as the accounts of township officers. Then in addition to that, it was provided that certain semi-annual statements should be made, a good deal in the same way that statements are made by national banks. The idea was to put the county and township accounts in very much the same position as national bank accounts at the present time. The bill was, as it seemed to us, very valuable. It is considerably shorter than the Wyoming statute, and simpler, but it covers very much the same ground, and our State Auditor, in whom we have every confidence, told us that its provisions could be carried out at a very little additional expenditure over the ordinary expenditure of his office.

When the three bills were introduced into the legislature, a tremendous lobby on the part of the school supply companies and all sorts of special interests was organized against them. Unfortunately the bill for the State

Accountant was introduced first, at a time when the lobby was strongest. The bill passed the Senate by a large majority, but was defeated by two or three votes in the house. The public clamor that was awakened by the fact of the existence of this lobby throughout the state induced the people all over the state to put pressure upon their representatives, and the work of the lobby was defeated in regard to the two other bills. The county and township bills passed and we have saved an immense amount of money by those two bills, but we would save much more if we could have this state examinership under the control of the Auditor. I had the honor of drafting the bill which was defeated, and did not find it at all a difficult matter to embody what seemed to be provisions which would be efficacious, The mere knowledge that a public official is likely to come down on the county officers at any moment, even if he never came, would be, in my opinion, of the utmost value. I have not the slightest doubt but that the examiners of national banks have saved many millions of depositors' and stockholders' money in those banks, even in cases where they have found out nothing, because they have prevented a great deal of evil from happening, which the mere consciousness that it may be discovered at any time would prevent, and I have no doubt that national bank statements have, though in a less degree, been of great value. Now if that can be done in regard to the county and township accounts, it can be done and made uniform in respect to the cities of the state, and it seems to me that it is one of the most practical measures to which this League can devote its attention. MR. DUNNING: We have in Pennsylvania a law by which, upon application of citizens of a township, the town can be "marshaled," and an auditor appointed by the court to make an investigation. That is all right, so far as it goes, but I think that this matter of a State Auditor or State Examiner is an excellent proposition, and one that would be of great importance in our own state. I will give you an illustration of what occurred in a township in Lackawanna county, adjoining the city of Scranton. The town was marshaled and the auditor made his report a few days ago, throwing out thirty-three thousand dollars of bogus orders, running through the last six years. It was disclosed that the road supervisors had been trafficking in these orders, that they had been drawing them and then selling them to storekeepers, the storekeepers selling them to others, and when finally they were turned in they would not be canceled, but put into circulation again, and so it was not discovered. The town auditors were of course in league with the supervisors. That was an appalling state of affairs in a small township. That might have occurred in a great many other towns in Pennsylvania and have remained undiscovered even up to the present time.

MR. HENDERSON: Mr. Foulke spoke of the lobby at his capital opposed to the matter of the passage of the bills that he introduced. I would like to inquire as to the personnel of this lobby.

MR. FOULKE: It was composed very largely of representatives of bridge

companies and supply companies and others that were not in the state at all, who simply sent their representatives to represent them. It was mostly an outside interest, largely pecuniary, I suppose.

MR. HENDERSON: My observation is that the objection to the system of examination will come largely from the interests within the state; it will come from the office holders; it will come from your penal institutions, your charitable institutions and your educational institutions-I do not except any of them. Those are the people that will object to having their accounts examined. Why? Because they make an appropriation here of say two thousand dollars to be applied to a specific purpose, and the statute says that it shall not be diverted to any other purpose, while the managers of these institutions do not desire to be so restricted.

MR. FOULKE: I would like to say that the county and township officers sent very liberal delegations into that lobby. [Laughter.]

MR. HENDERSON: It is just because the conditions referred to actually exist that the matter of public examination is cried down by a great many institutions in our land to-day. I give you this to think about, and when this committee that has been authorized shall be appointed it will find that the objections will come largely from the source stated.

MR. FOULKE: This matter was first called to my attention by Mr. Foote, who made a careful study of it, and was satisfied of the excellent results obtained in Wyoming, and he developed it more in detail than I have done. MR. K. K. KENNAN, Milwaukee: A word in regard to what has been done in this state, or rather what has not been done in this state, regarding uniformity of accounts. I had occasion two years ago to note the necessity of some such uniformity. There are about one hundred cities in this state, in round numbers. I sent to each of these cities asking for a statement of the amount of taxes levied and the purposes for which they were levied, supposing that these statements would come back in such shape that the statistics could be readily tabulated. But I do not think that any two of the one hundred cities sent back precisely the same tabulation. Very great difficulties arose in endeavoring to form any tabulation from the statistics furnished. One of the most common divergences was in the matter of the receipts of the cities. Many reporting, for example, if fifty thousand dollars were levied, that that was in addition to all receipts, whereas in another city it would mean that forty thousand dollars were levied on property and ten thousand dollars were received from licenses and from other sources, and so on all the way through, so that when you made up a classification from the statistics furnished, my recollection is that the headings received exceeded one hundred purposes for which money was applied.

I have had abundant opportunity to observe the loss to the public through the manipulation of the statistics of municipalities. For some fifteen years the bulk of my business and of my work has consisted in investigating the statistics of cities and municipalities with a view to ascertaining whether

any money was being stolen, and if so how much; and the various ingenious devices which obtained for the purpose of covering up the misapplication of money, would really command the admiration of any person at all expert in accounts. [Laughter and applause.]

I particularly would like to impress upon the members present the importance of a uniform system of accounts for municipalities. A year ago I spent nearly six months as an employed attorney endeavoring to straighten out the accounts between a town in this state and a county. It was supposed when we began that there was not much coming either way, but the town had a distinct impression that it had some money coming and the county thought it was the other way. As an actual fact the town was shown to have been for years entitled to about thirty thousand dollars on balances, and I have since discovered similar discrepancies in other counties and towns.

I would just mention one other fact of interest, and that is that in the last session of the legislature a bill was introduced for a public examiner, and I happened to be in Madison at the time it was argued and talked about, and I was very much surprised at the great opposition which developed against that bill. The exact sources of that opposition were not immediately apparent, but that there was a tremendous opposition was very plain to anybody. I am sorry to say that the bill failed, as I think it was a step in the right direction. I hope that this question of uniform accounting of municipalities will be pressed by this League, because it seems to be one of the effectual preliminaries to effective practical action on our part.

MR. BONAPARTE: I gather from the papers which have been read that there is some subtle connection between a state examination and auditing of municipal accounts and the question of the advisability of municipal ownership of public utilities. That connection however is not quite clear in my mind, and I do not see how stating the accounts of a city would enable one to find out whether it would or would not be beneficial for it to acquire public service companies.

MR. HENDERSON: Do you mean to ask how uniformity of accounting would throw light on the subject of municipal ownership?

MR. BONAPARTE: How would it?

MR. HENDERSON: In the first place uniformity of accounting presupposes, as your Program places it, that these corporations shall make reports. MR. BONAPARTE: I do not understand how the accountant is to investigate the affairs of the corporation.

MR. HENDERSON: Investigate all those affairs, and then you will begin to determine and understand whether or not it will be profitable to the municipality to own this public service.

MR. BONAPARTE: How would you be able to tell that until a municipality or two owned a public service corporation and you are able to compare the accounts of the street railway or whatever it might be as run by

the municipality with the accounts of the street railway before it was taken over?

MR. HENDERSON: We have some municipalities already that own their street railways. Some have taken advantage of their opportunities already and purchased their public service corporations.

MR. FOULKE: Is there any city now that owns its street railway?
MR. HENDERSON: I think so.

MR. FOULKE: I did not know that there was. I knew that that was the case with water works, but not with street railways.

MR. HENDERSON: I am sure that that is the case with water works and electric lights. We own water works, but no electric light plant. We grant no franchise for a period exceeding fifteen years, and at the end of that period new contracts are made. The electric light companies pay nothing to the city excepting their taxes. We do not charge them a rate such as the street car companies and other corporations pay, but they are required to keep their cost of service to the patrons at an amount not to exceed so much per month, and in that way the user gets the benefit of the profits that may accrue by reason of their not having paid an assessment.

MR. JOHN DAVIS, Detroit: I would not presume to explain to the worthy gentleman from Baltimore what seems doubtful to him; but as I understand it the proposed system of accounting would require uniformity in the accounts of public service corporations. I think it would be an excellent plan if when privileges are granted to public service corporations that there be reserved the requirement of uniformity of accounts kept by the corporation, and the right of examination on the part of the state or municipality, by some official examiner.

THE SECRETARY: In Pennsylvania we have a large number of hospitals and charitable institutions that secure from the state large appropriations, and I regret to say that very considerable scandal is at times attached to these appropriations. These hospitals, though very worthy institutions as far as their purposes are concerned, maintain regular lobbys at Harrisburg with a view to securing large appropriations, and there is one hospital in a city not very many miles from Philadelphia which invariably gets all it asks for, and it is very generally known that a considerable portion of the appropriation is laid aside for what they call "legal services," which however are really extra-legal and purely legislative. Of course that is not a matter of positive knowledge, but of hearsay only, but hearsay founded upon reliable reports. Now if we had a system of accounting in Pennsylvania which required that all institutions that received any money from the state should have, first of all a uniform system of accounts, and that those accounts should be open to the scrutiny of the state examiner and be public, it would prevent the utilization of any portion of the money for improper purposes, or would disclose the fact that a considerable portion of the money was used for illegitimate purposes, namely, for unduly influenc