The sun. [volume] (New York [N.Y.]) 1833-1916, 1898-12-21
Securing the City's Deposits.

Comptroller Golfer has called attention
to o defect In the city's financial methods
which unquestionably needs to be remedied.
and that is, the want of special security for
the immense amounts Of money which the
city frequently has on deposit with banks
and trust companies. Besides the proceeds
Of bond sales, as they are made from time
to time. nearly the whole Of the city's taxes
for the year, amounting to about $75,oOO,-
900, collected in October and November, are
deposited in various financial institutions.
The law requires that no one institution
shall receive Of the city's money an amount
exceeding so per cent. Of its capital and
surplus, n consequently, a considerable
sum, which the larger depositaries are de-
barred from accepting, has to be distributed
among smaller concerns Of no great lnan-
cial strength. In this way, the city's funds
are so scattered, that 1t Is impossible for
the Comptroller to watch them properly,
and, without any fault Of his, q little de-
positary might fail, and the city suffer con-
siderable loss. Indeed recently, it was only
by accident, as it were, that suspicious
were aroused OF the solvency Of one bank,
which held $25o,ooo Of the city's money.
and which has since gone into Liquidation,
in time to draw out the money and save It
from being locked up indefinitely, and,
perhaps, partially lost.
The Comptroller, therefore, proposes the
enactment Of a law requiring banks and
trust companies acting as depositaries of
the oity's funds to furnish security for their
repayment In the shape Of bonds forming
part Of the city's Consolidated Debt, in the
same way that the national banks, acting
as depositaries for money belonging to the
United States, furnish security for It In the
shape of Government bonds. The city
bonds bearing interest, at say 8 per cent,
while the Interest allowed the city on its
deposits Is but 2 per cent, the depositaries
would be sure Of o profit Of 1 per cent. and
e. much more as they could get by lending
the deposits, while the city would be Sc
cured against loss In the event Of the in
solvency OF q depositary.
The Comptrollers plan will be q good one
II the depositaries will accept and act upon
it. Whether. however. a bank or q trust
company OF small capital will consent to
Invest enough Of Its resources in city bonds
TO qualify 1t to become q city depositary, as
the Comptroller proposes, Is doubtful. City
bonds are not. like United States bonds,
salable at an hours notice and at a trtning
concession from the market price. They
require tim and trouble for their disposal.
and q loss On them might wipe out all the
profits on the deposits they were bought to
secure. The money looked up | them would
be withdrawn from available use, and, DOS
sibly, at a critical epoch cripple the institu-
ton owning them.
Partial security Of the kind desired by
the Comptroller might be obtained by
giving TO city deposits a preference, in
case OF the insolvency OF the depositary,
like that now given by the act Of 1875 to
deposits by savings banks in banks and
trust companies. This, again, would be OBJ
jected to, as the preference now given to
savings banks Is objected to, both by the
officers OF d~epositarIes and by their other
deposttorA The dealers with a bank or a
trust company xoOstvtng deposits from the
city WouidInaturaIlysrsSsn the possibility