The state capital., 1899-01-13
The Secretary of the Treasury Re-
spends to Congressional Reso-
1utions of Inquiry.
THE REPLIES ARE VERY VOLUhIhOUS'
In Summing Tn the Secretary pe-
e,,. .,t xybatever Has Bceh
Done Has warrant OF La" '
Has Been Done tn Conserve 'he
Country's Best interests

| resolutions recently introduced III tue
senate by Mr.. Allen, OF NeorasAa' aii>'
III the house by Mr.. Sulzer' OF Ne"
York. The text of his reply, when Is
an exhaustive exposition OF the man
apement of that branch OF the treas
ur. finances under his admln'stra-
ton. relating to national bank depoS-
itories, contains about 5000 words
which is supplemented by sPeei"l re-
ports from department officials fela-
tive to special inquiries i'll the resolu-
tions including copies OF over l'ooo
letters on the subject under cohsldera-
ton. In summing up his reply 10 the
inquiries the secretary says:
Secretary Cages summing Up.
First-That the reason for utilizing ma
| tioral banks as depOsltories lol puptio ~
| moneys, as authorized by law WHEN ~ ny =
| receipts of the treasury were eAceSu1ni ~ :
| it's expenditures has been to aVOld tHe
| disturbance to business Whlch lle WI VII
| draWal of large sums OF money 14 dt3 344t
active circulation TO the tIes'9uiS tbnS
| must inevitably cause. Inc poAcy tiIuS
| pursued bv me has been the eStaDnSheu
| policy of the government for many year .,
| and a departure from II uhueF slLlildi
| conditions would certainly CAUSE "i0'"
SeccndNThe reason for directing the in
| ternal revenue receipts INTO depository
| banks at this time is that the revenues
| are now largely exceeding disbursements
| from month to month, ana seem llheIS
| to do so for an indefinite time; Inns con
| dition would be a menace to the business
| world il assurance were not given that
| this surplus would be diverted from the
| treasury vaults to public repositories
where for while secure to the govern
ment, it would be available for business
use.
| Third-The reason for directing all the
| internal revenue receipts to one uepoS >
| itOry was that it is more convenient TO
| frs: collect the receipts of numerous OF
| fees into one place, and to make the de-
| sired distribution from it, than to give
| new instructions daily to ll3 collectors
| The most convenient agency to affect
| such distribution is bank Wnlch IS d
member of the New York clearinghouse,
Folrth-The reason for selecting the
| National City bank as such distributing
agent was that at the time the Ordef
was issued, it was one of two banks when
had offered bonds sufficient to cover the
amount of the daily deposit. Its bond de-
pOsit was 81 eco, 600, and that of the Han
over national bank 81, $50, 500 The National
City bank was, therefore, the one most
naturally chosen. OF the 68 banks APP
plying for a share of the deposits, the
National City bank, the Hanover national
bank, and three others, applicants for
over $S00,000 each, are the only ones out
of the 6S constituting group one, which
have not been supplied the full amount
for which they had offered security.
Fifth-The cuStomhouse property was
s~ld to the highest bidder, on July j.
1889. Under the terms of the sale it hac
the option of paying in cash all of the
purchase money at any time or any part
it might elect above $750,000, which sum
it was absolutely obliged to pay. 1t ex-
ercised this option by choosing to pay
3,2l5000, leaving $4,000 yet due. No deed
will be executed until full payment has
been made.
The payment received was turned into
the treasury by deposit in the, National
City bank, it having been the estab-
lished custom of treasury officials, under
the counsel of their legal advisers, sup
ported by decisions of the supreme court
to consider moneys on deposit to the
credit of the treasurer of the United
States in designated repositories as
moneys in the treasury. This deposit was
made in depository bank for the same
reason that other deposits have been
made in them, viz: Because to withdraw
the currency into the vaults of the treas
ury, where it was not needed and could
not be utilized, would have required
withdrawal of credit that was being eX-
tended in commercial circles, and to that
extent a disturbance of the natural order
of business would have followed To have
required it's payment by the National DIty
bank to another designated depository
would have been an ungraciOus discrim-
ination without substantially changing
the fact
Finally, under my administration of the
treasury, no discrimination in favor of
one bank against another has been made
Generally speaking, when an increase in
depository banks was desired. all have
been invited to qualify themselves for re-
ceiVing such money and have been equal
Iy and equitably considered in their re-
spective relations to the treasury.
A General Review.
Before proceeding to respond to the
resolution specifically Secretary Gage
gives a general review of his whole
course in the branch OF public finances
concerned with national bank dep0si- |
tories. He notes the provisions of the
statutes which make all national bank |
ing associations designated for that
purpose by the secretary of the treas
ury repositories of public money, ex-
cep: receipts from customs, under |
such regulations as may be prescribed |
by the secretary, and continues:
That statute became a law June g 1854 |
and it's first marked recognition was in |
the refunding operations of 1873, when Sec |
rotary Sherman thought it necessary to |
sums of money which reached as high as |
$279,344, $40. Secretary Fairchild in 1857
IS, during a period of abnormal receipts |
of revenue, increased the number of de- |
pcsitory banks, and allowed such banks |
to accumulate balances reaching $61, 546,- |
600.
On March l, 1897, there were 159 ma
tonal bank repositories, holding total /
of $1G19S, 41o. With few exceptions these |
institutions received deposits from, inter |
nal revenue collectors and remitted to |
amount of the fixed balance which they
were permitted to hold. The amount of |
public deposits remained about the same
during the first six months of this ad-
ministratiOn In November began those |
large payments which resulted from the |
highly successful settlement of the Union
P1Pitic Indebtedness JU1pptS |
ing $58, 4fS, 223 I was thought expedient,
as a part Of this enormous transaction to
utilize for few days the services of de-
pository banks, with the result that at the
end of December, 1884, such deposits had |
increased to $48,1S2. III. The reason for
this action was to avoid the injurious eff |
den withdrawal from public uses into the
vaults OF the treasury of so large a sum
as $58,000,0 900. By the end of May 1898,
these public deposits had been reduced |
to SIS, 239, ,359
Soon after this, the government was
confronted with the necessity of raising.
Immediately, large fund for war pur-
poses and acting under the authority of
the war revnue act, the people were called |
upon TO subscribe to an issue of S2,000.090
of bonds
On the day the books were opened. the
National City bank of New York, and its
associates, offered to take, at par and
accrued interest, any portion Of the bonds
that might not be subscribed for by the
public and on the same day J. 2. Morgan
& Co., and their associates, numbering
Is of the greatest financial houses of the
country, also subscribed the entire issue |
of $200,0O0009, or any part that might not
be subscribed for by the general public.
1t viii be readily recognized that the
absorption of $500 COG, 900 within the space
of a few weeks could not fail to disturb
most seriously the general business of the
The secretary of the treasury |
feels some measure of just pride that the
financing of the war loan of 1858 was ac-
complished without the slightest inter-
ST-Jl
the industries of the country which has
made the present a period OF unexampled