Thomas James Keating (1829-1898)
MSA SC 3520-1566
Biography:
by Karen Dunaway, Research Archivist at the Maryland State Archives, and Joanne Archer, Public History Student, UMBC, spring 2001.
Born in Smyrna, Delaware, May 3, 1829. Raised in Queen Anne's County, Maryland. Son of Michael Keating and Elizabeth Jane (Palmer) Keating. Attended Centreville Academy, Queen Anne's County; Princeton College, graduated 1848; studied law under Richard B. Carmichael. Admitted to the Maryland bar, 1851. Episcopalian. Married Sarah F. Webster in June, 1862; six children were Lizzie, Harry, Frank, Thomas James, Jr., Annie, and Hanson Palmer (or Arthur). Died in Centreville, Queen Anne's County, June 1, 1898.
Practiced law on the Eastern Shore after 1851. Purchased the Centreville Sentinel, the Queen Anne's County newspaper, in 1857; changed its name to The Centreville States Rights and was editor and proprietor of the paper until 1864 when Unionists (called the "Home Guard") burned down his office. Adjutant for the 38th Regiment, the Queen Anne’s militia, organized in 1859. Elected State's Attorney for Queen Anne's County, 1860-76. Served as counsel for the defense in the Paca murder trial. Instrumental in setting up a smallpox hospital in Queen's Anne's County after the almshouse was damaged by fire in September, 1865. Delegate to the Maryland Constitutional Convention of 1867. Formed a partnership with his brother, B. P. Keating, 1872-97. President of Maryland state Democratic convention, 1875. Comptroller of the treasury, 1878-84. First president, Queen Anne's National Bank, 1884-. Appointed State Tax Commissioner in 1894. Chair, Queen Anne's County Democratic Central Committee, 1893. Member, Episcopal Church.
Keating was elected with a large majority as comptroller of the treasury in 1877. He was ultimately elected for three consecutive terms, each time running without serious opposition and with the full support of his party and Democratic Party boss Arthur Pue Gorman. Keating spent most of the week attending to his comptroller's duties in Annapolis and returned to Centreville and his law practice for the weekends. As comptroller, Keating was considered a good financial manager. In an era of "retrenchment and reform" of state finances, he refinanced portions of the state debt, repealed the bounty tax, and oversaw a steady increase in state revenues. A proponent of keeping Maryland's taxes among the lowest in the Union, he reduced state expenditures by eliminating the bounty laws and lowering salaries at the tobacco warehouses and on the fisheries force. He also managed state investments such as B & O railroad and the C & O canal, both deeply in debt. As comptroller, Keating was a member of the Board of Public Works along with Governor William T. Hamilton and Treasurer Barnes Compton. The board split over whether the state should continue to invest in the C & O Canal Company, where it held over three million dollars in mortgages and over five million dollars in stock, and where Gorman was president. The board was under considerable public pressure to divest the state of its interest in the company, which always seemed to be on the verge of bankruptcy. Governor Hamilton opposed continued state support of the canal while Keating and Compton supported it. As a result, Keating and Compton were able to consistently outvote Hamilton not only on the issue of investing in the canal but on other matters such as the appointment of its president and directors. After his first two years as comptroller, the Centreville Record reported that Keating's "probity and integrity is known and understood. His administration of the public's money during his two year term of office has been able, prompt, thorough and an honor to the trust he holds of the people of this State, and reflects credit alike upon the people of his county as well as upon himself." (Centreville Record, 17 July 1879)
The Constitution, Art. 3, Sec. 34, declares that "no debt shall be contracted by the General Assembly, unless such debt shall be authorized by a law providing for the collection of an annual tax or taxes sufficient to pay the interest on such debt as it falls due, and also to discharge the principal thereof within fifteen years from the time of contracting the same; and the taxes laid for this purpose shall not be repealed or applied to any other object, until the said debt and the interest thereon shall be fully discharged." Keating chafed against this constitutional restriction which essentially left no funds for the operation of the General Treasury. In every annual report issued while he was in office, Keating pointed out what he felt to be the impracticality of this type of system. With insufficient funds to meet its debts, the state was forced to borrow from special funds in order to make loan payments and retain a good credit rating. In Keating's first year in office the annual report shows that the treasury was in debt to the following special funds: Oyster fund, $247,667.38; Public School fund, $217, 140.75; Bounty tax, $83,757.74. Keating believed that borrowing from these funds was the only way to keep the government operating.
Keating believed that the gradual rather than the rapid extinction of the public debt was the best policy, and that if loans were issued and redeemed within a fixed period, they could be funded at a lower rate of interest and then the debt liquidated whenever there were surplus funds available. The redemption of a debt before maturity was often at a high premium and would have required a high rate of taxation. The Maryland Republican and State Capital Advertiser supported that policy, writing that, "the fluctuations in value of State, city, and internal improvement stocks and bonds are so great that investments in them for purposes of a sinking fund are absolutely impracticable except at great waste of public resources." (The Maryland Republican and State Capital Advertiser, 11 June 1881). Keating claimed that debtholders felt secured by the securities held against the debt by state works of internal improvement and that it was unwise to redeem early at high premiums. In 1880 the treasury officers created a sinking fund for the Treasury Relief Loan. Accordingly, $43,883.06 were expended for the fund. The cost of this investment in premiums was $3,518.90, showing that "the system devised by the Constitution, for the redemption of a loan when created, to be a rather expensive luxury, that could only be afforded when there was abundant money in the Treasury." (Comptroller's Annual Report, 1880, pp. 6-7).
Keating's practice of borrowing from special funds for general operating expenses became the most controversial issue of Keating's tenure. In June 1881, the year of an election, Governor Hamilton accused Comptroller Keating and Treasurer Compton of mismanagement of the State's finances. At a political meeting held at the Maryland Institute in Baltimore, Governor Hamilton alleged that the officials had "been derelict of duty in that they have violated the State's obligations to maintain sinking funds for payment of the State debts as they mature." (The Maryland Republican and State Capital Advertiser, 11 June 1881). He charged the men with using the sinking fund to pay other state obligations and asked what had happened to the $5,649,656 that should have been in the fund. In their defense, Keating and Compton pointed to the Act of 1864, Chapter 285 that canceled $4,495,106 of bonds in the sinking fund. The Act of 1872, Chapter 276 canceled the remnant of the bonds. Essentially the entire fund was expended years before either official took office. Keating also showed that the loan taxes were simply insufficient to meet the obligations of the debt. Since 1868 every time a loan had been created a tax had been dedicated to its payment. In each instance, however, the annual tax imposed was not much more than the annual interest due on the loan and sometimes it was less. For example, the Maryland Defense Loan created in 1868 for the payment of bounties imposed a tax of 5 cents per one hundred dollars. Between 1864 and 1867 the amount disbursed for bounty claims was $4,196,864.25. The entire amount of bounty tax collected from January 1864 to September 30th, 1880 was $4,057,040.96. The amount disbursed during the same period for interest on the "Defense Loan" was $2,443,724.26. Clearly, the tax levied could not pay both the claims and the interest on the loan. Moreover, since no direct tax was levied for the general support of the state government, the taxes had been required and used to meet appropriations and demands for the cost of running the government.
Keating acquitted himself of the charges levied against him by Governor Hamilton in both the eyes of the public and the politicians. The Special Committee of the House of Delegate which investigated the charges exonerated the comptroller and treasurer from any mismanagement. The Democratic Party stood firmly behind Keating, nominating him for a third term without opposition. His nomination and subsequent election were taken as an endorsement of his policies and it was widely held that Hamilton's accusations had been political in nature; that Hamilton had simply wanted to control the C & O Canal "and with it the management of Western Maryland politics." (The Centreville Observer, quoted in The Maryland Republican and State Capital Advertiser, 2 July 1881). The Maryland Independent wrote that, "Gov. Hamilton's accusations seem only to have aroused the people to the vindication of a faithful officer, for the people see that the real fault the Governor has to find with him is not so much the mismanagement of the State funds, as it is that he would not vote to place the management of the Chesapeake and Ohio Canal under the control of his Excellency." (Quoted in The Maryland Republican and State Capital Advertiser, 2 July 1881). Similarly, the Westminster Advocate asserted that, "His administration of the office for several years past has been able, efficient and satisfactory, and the recent attempt of Gov. Hamilton to cast reproach upon him determined him to stand for another term and moved the people to sustain him from unjust, uncalled for, and unwarranted attacks upon his administration, in which truth was subordinated to malice and ambition." (Quoted in The Maryland Republican and State Capital Advertiser, 2 July 1881).
One of the lasting impacts Keating had on the practices of the comptroller's office was the practice of refinancing the state debt at lower rates of interest. The Maryland Defense Loan of 1868 fell due in 1883 for the amount of $3,326,750.66. In 1879 the credit to this tax was $145,628.73. The balance of the tax, $613,953.78, and millions more had gone for bounties. The Treasury was unable to meet the payment and asked for a new loan to be authorized at a lower interest rate. The Acts of 1882 chapter 289 authorized a new $3,000,000 "Defense Redemption Loan" at 3.65 percent interest, redeemable in fifteen years. This action reduced the balance on the loan by $89,605.03 per year. The policy of exchanging or redeeming loans was an effective way to lower the state debt and this practice was followed by subsequent comptrollers who issued new loans in 1886, 1888, and 1890. Furthermore, the approval of these loans endorsed Keating's practice of reserving the state's securities rather than liquidating the debt too quickly.
Keating left office in January of 1884 with the full support of his party and the public and with the hope of becoming the next U.S. Senator from Maryland. He had proven himself to be an efficient and able administrator of state finances who had understood and complied with the constitutional responsibilities and duties of his office. He had survived a particularly bitter campaign in 1881 and had shown himself to be a wise financial manager. His service as comptroller had focused greater attention on the issue of dedicated taxes and debt financing and repayment. The biggest disappointment Keating probably suffered was the that he had been unable to obtain official sanction for borrowing money from special funds, a practice he believed had been not only necessary but had constituted the best use of state funds. However, he had brought to light the delicate line the state walked in its policy of keeping taxes low. It was Keating's hope that taxes could eventually be eliminated by the continuous refunding of state debt and although this did not come to pass, he did show the state an effective way of lowering the amount of interest paid on the debt. The Harford Democrat wrote on his renomination in 1881, "In all the history of the office…there has never been a time when the finances of the State were in as healthy a condition as now or had a more promising future." (Quoted in The Maryland Republican and State Capital Advertiser, 2 July 1881). Thomas J. Keating could ask for no better endorsement of his service to the state of Maryland.
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