The modern Office of the State Comptroller – or OSC for short – has only existed in New Jersey since 2007.

But Comptrollers in New Jersey government have served with different responsibilities dating back to 1865. Read on about the first New Jersey State Comptroller, the challenging time in history when he took office, and the issues he confronted in his first report.

On St. Patrick’s Day, 1865, the Senate and the General Assembly of New Jersey created a Comptroller of the Treasury who would be appointed to a three-year term by the Governor, with advice and consent of the Senate.

It was a tumultuous moment in American history. Three weeks later, Robert E. Lee would surrender to Ulysses S. Grant, ending the Civil War. One of the first Comptroller’s main responsibilities would be to figure out how New Jersey would financially provide for tens of thousands of soldiers coming home from war. The State also needed to find a way to financially support the families who’d lost husbands and fathers – including 2,489 African American men from New Jersey who fought in the Civil War.

This was no small challenge, but it was only the beginning. The other major problem facing the first Comptroller was paying back the massive war debt New Jersey had incurred fighting to preserve the Union. Meanwhile, popular sentiment for state-funded services like public schools was on the rise, with no clear answer as to how the State would raise the funds to support these new social programs.

According to the law passed establishing the Comptroller’s Office, his job would be “to examine, audit, adjust and settle all accounts due to or presented against the state, and certify the amount adjusted or allowed, to the treasurer for receipt or payment.” The original Comptroller in New Jersey was envisioned as essentially an accountant for the State, to make sure that all the State’s debts were settled, and to ensure “the truth, fairness, correctness and justice” of the State’s financial books.

It’s important to note that this is not what the modern Office of the State Comptroller does. Today, the Treasury Department is the department responsible for handling the State’s finances. The modern OSC is “in but not of the Treasury.” That means that, unlike the original Comptroller, OSC is a fully independent agency and the Office has autonomy to audit or investigate any state agency, authority, or official. In 2010, OSC also assumed the powers of the state’s Inspector General and the Medicaid Inspector General.

The 1865 Legislature gave the comptroller a lot of responsibilities related to protecting the financial interests of New Jersey:

• Loans could not be made by the Treasurer without the approval of the Comptroller.
• County freeholders, mayors, and town councils were responsible for submitting their finances to the Comptroller before October 1 – the start of the new fiscal year.
• The Comptroller was a trustee of the still-nascent school fund, a commissioner of the state library, and a general superintendent of banks – which had to submit quarterly statements to the Comptroller.
• The Comptroller was responsible for procuring fuel for the Legislature for the entire year by advertising “for at least two weeks in one or more of the newspapers published in the city of Trenton.”

The State Comptroller was paid $2,500 a year for discharging these duties.

William K. McDonald became the first Comptroller of the Treasury for New Jersey and was immediately met with challenges.

As McDonald tells us in his first annual report, he was assigned an office in the State House in its new southern wing. But construction hadn’t been completed when he took the job in April. So, McDonald had to wait until June to start his official bookkeeping.

While he waited for his office to open, McDonald traveled to the Comptroller’s Office in New York to observe “the mode of discharging the public business there, with its warrants, vouchers, and books, carefully examined, to the end that useful information might be obtained for the government of an office, hitherto, within this State, unknown to its laws.”

When he finally took office in June, Comptroller McDonald set to work figuring out how New Jersey was going to repay its more than two million dollars of debt incurred from fighting the Civil War. The State was paying six dollars a month to its volunteers, 3,162 naval recruits and 2,489 African American servicemen. And the State was paying the same amount each month to families who’d lost a husband or father in the war.

The federal government was proving unhelpful in paying back the debts, and so Comptroller McDonald recommended that the Legislature levy a state tax and sell bonds. That was in addition to the development of a Sinking Fund, which was created in 1864 to pay off New Jersey’s war debt. Each year, the State would pay $100,000 into the Sinking Fund until the debt was extinguished in 1892.

Government accountability and financial prudence were at the front of the first Comptroller’s mind. McDonald ends his first annual report with a powerful summary of the State Comptroller’s responsibilities:

These duties are of grave responsibility, and in their performance are not always pleasant.

To stand between a creditor and the treasury, and refuse his claim, or reduce its amount, is no enviable predicament. Yet it is just this predicament which appeals to the Legislature for sympathy and support. The office is one which the State has long needed, and which when properly administered will be found most useful in the detection of fraud, in the advancement of justice, in the promotion of economy, and in saving the State every year thousands of dollars that otherwise would be lost to it.

While the current-day OSC’s exact responsibilities may differ from the first Comptroller’s, preventing fraud, advancing accountability and transparency, and saving the State money continue to be guiding values of the Comptroller’s Office – just as they were in 1866.

Many thanks to Caitlyn Cook at the New Jersey State Library for gathering research and original sources for this column.