The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1888-02-22

Assaults That Frightened the Administra-
tion-How Banks Impose the Ignorant
Special to the indianapolis Journal
WASHINGTON, Feb. 21--The assaults made on
the administration on account of its policy of
depositing some OF the surplus with national
banks which made deposits of United States
bonds with the Treasurer have had the effect of
frightening Secretary Fairchild and Presidents
Cleveland almost out of their boots. A couple
of weeks or so ago, while the House was dis
cussing the Wilkins bank circulation bill,
Weaver of Iowa. Brumm of PENNSYLVANIA, Bland
OF Missouri. and other inf1ationists took occa-
sion to char &c the administration with playing
in TO the hands of national banks by making do
positories OF them. They asserted that the ad-
mini straton intended to assist national banks
more than the people by the practice About
forty or fifty million dollars has been put in
circulation during the past year by this depos-
tory system. As soon as the attention of the
country was called to the matter, and there was
not only discussion of its propriety
in the House, but the press of
the country, the administration fed from
its position, and refused to create any more de-
positories. AS matter of fact, the depository
system is not one OF much profit to the banks
owing to the high premium upon bonds
Nearly all OF the bonds deposited with the
Treasurer for the purpose of securing deposits
of the surplus money are the four per cents,
which are due in about twenty years. To pro-
cure these bonds 1T has been necessary to pay
twenty eight twenty nine cents premium,
which cuts down tho interest on its face to %
per cent Then the banks have had to run the
at any time, as at present, and to take also, all
chances Of changes in the banking laws and
laws CT aLiDg new bonds-in short, the multi
tudnoEs risks incident 10 the national banking
vet has h~v, - h-t~
m ado application few weeks ago for deposits
from the government notified the Comptroller of
the Currency, after inquiring into the bond
market and the probabilities of Congress legis-
lating on the national bank system, that they
did not desire to fulfill the requirements neces-
sary to become United States repositories.
But what number Of banks will do who have
made application for an increase of their depos-
its from the government for the purpose of
misleading their individual depostors it 10 diff
cult to conceive. 1t is strange, but true that
there are large number of national banks in the
country. and especially ia the Central States,
that mislead their patrons by advertising that
they have many bonds deposited with the
United States Treasurer to secure deposits and
insist that these bonds security individual
depesitors, which is a bold fraud and imposition
on ignorance. There are no United States bonds
deposited with the Treasurer anybody else to
secure individual depositors in banks. The bonds
which are deposited here secure circulation is
sued by she banks upon the authority of the
government. or secure the government against
loss account of making tho banks United
States depositoriss-to secure the gov
eminent against loss, account of having
deposited its money, like ordinary individuals, in
the national banks The government does not
deposit its money in banks until the banks have
deposited with it an equal amount of dollars in
bonds The reason the government does this
when individuals do not require this security,
is because it is the custodian of the peoples in
teress. The only security there is in banks to
individual depositors is, in reality, character.
If the officers and directors of bank and the
people who run 1t. have not honesty. there is in
fine no security to depositors, beyond that
which the supervision of tho government gives.
The capital of the bank and the money deposit
ed all goes to honor the demands of depositors,
but that is al. IA the custody of the bank officers.
the severe and faithful scrutiny of the govern
ment over national banks affords. of course a
great deal of security to depostors. because il
is a very difficult thing to continue dishonest
practices in banks without detection, and then
the punishment is swift and painful