The failure of the Capital National Bank of Lincoln in January of 1893 occurred during a low point in Nebraska’s business and political life. Legislative investigating committees discovered instances of fraud involving the management and disbursement of state funds. C. W. Mosher, president of the failed Capital National, was found to be involved in the fraudulent management of state penitentiary labor. A committee investigating the hospital for the insane at Lincoln discovered overcharges for such items as coal. Betts, Weaver and Company, for example, had charged the state for 438,000 tons of coal but delivered only 336,000 tons.
For these and similar fraudulent acts, the Nebraska House of Representatives voted articles of impeachment against the following Republican state officials (all members of the Board of Public Lands and Buildings) who had been in office during the preceding years: John C. Allen, secretary of state; Augustus R. Humphrey, board commissioner; George H. Hastings, attorney general; and John E. Hill, state treasurer; as well as William Leese, former attorney general, who had been a member of the board from 1885 to 1891; and Thomas H. Benton, state auditor from 1889 to 1893. These men were tried before the Nebraska Supreme Court.
A number of criminal prosecutions in the district court were made of persons found guilty of defrauding the state in contracts. Delay and political influence resulted in only one conviction, that of one of the worst offenders. He was sentenced to two years in the penitentiary, but served only a few months.
In the impeachment trials before the Nebraska Supreme Court, the cases against Hill, Benton, and Leese were dismissed according to the decision of the court, because the impeachment of a state officer after his term of office had expired was unconstitutional. There remained the impeachment cases against Allen, Humphrey, and Hastings. After an extended trial a majority opinion held that the delinquencies of the respondents had been due to errors of judgment only and were not impeachable under the constitution.
