Virginian-pilot. (Norfolk, Va.) 1898-1911, 1900-01-04
New York Herald.)


on any bank or group Of banks, the re-
cent action OF Secretary Gage in in
crcasing the government repositories
to- receive internal revenue money is
attracting intense interest in the fnan-
cial district.
This interest arises, in part, from the
fact that Secretary Gage is assuming
q policy in the matter. the direct op-
posite Of that laid down by Secretary
Window. when the Republican party
was restored to power In 1888. the res
toration being, In measure, due tc
criticism of the manner in which the
accumulated surplus was handled by
the first Cleveland administration.
Attention is attracted to the matter
also by the Illustration that it affords
of the Anticipated independent treasury
system of the country, by means of
which money Is drawn from the chan
nels of commerce and permitted to
accumulate in the Treasury until strin-
gency develops, when the only meth
cd of relief is through the purchase
of bonds or the deposit of public
moneys with the banks. or both.
FACTORS IN THE PROBLEM.
Criticism to which Secretary Gage
Is subjected, in the opinion of many
bankers. arises from a condition not
of his creation, and one that he was
powerless to prevent-due, first, to q
faulty treasury system, which takes
money in and prohibits paying It out;
second. sale OF bonds, to conduct a
war, an excess of requirements, and,
third, the overtaxing of the people by
the Internal revenue-a tax levied to
meet the expenses of war which was
not as prolonged or as expensive MS
the administration thought it would
be.
The condition that exists to-day is
only new In c. few features. 1t Is prac-
tloally the same problem that con-
fronted Secretary Fuirchild in 1885 and
1887. only at that time the surplus was
accommodating from the customs, due to
the long continuation of the war tariff,
while to-day 1t is the result OF excess
sive internal revenue receipts. At both
times the Treasury system proved
stumbling block in the way of afford
Ing relief. and the same problem has
presented itself to the country again
and again since 1853.
Antagonism Of the public to banks
and the money power Is as old as the
Federal constitution. Sometimes 1t is
more keenly manifested than at others,
but Is never entirely absent from the
public mind. 1t was to this antagonism
that the independent Treasury owns its
existence. the idea being to create a
safe depository for public money, indie
pendent of the banks, which, after the
adjustment of the United States bank,
DID not administer their trust in a man.
ner creditablo either to the institution
Otto the satisfaction of the public.
GROWTH OF SUB-TREASURIES.
Gradually the sub-Treasuries have
grown nearer and nearer 10 the banks.
The exigencies OF the civil war, the
floating of heavy loans at the outset,
made closer relations desirable, and
when the National Banking act was
passed provision was made making it
possible for every national bank to be-
come q government depository. Prior
3 TO that only one bank in each State
which lacked a sub-Treasury could act
as a depository. and then only-under
most stringent regulations
That section permitting all national
banks SO to act is 5153 of the revised
statutes. and is as follows:
All national banking associations.
designated for that purpose by the
Secretary of the Treasury, shall be de-
positorles OF public money, EXCEPT re-
ceipts from customs, under such regu-
1ations as may be prescribed by the
Secretary; and they may also be en-
ployed as financial agents of the gov
eminent; and they shall perform all
such reasonable duties as repositories
of public moneys and financial agents
Of the government as may be required
of them. The Secretary of the Trea-
sury shall require the association thus
designated to give satisfactory secur-
ity, by the deposit of United States
bonds and otherwise. for the safe
keeping and prompt payment OF the
public money deposited with them, and
for the faithful performance of their
duties as financial agents of the gov
eminent.
Up to the first Cleveland administra.
ton the government exercised great
Jealousy in the matter OF repositories,
and though under the National Bank
ing act any association which qualified
could so act. the number that did quail
1fy or were granted the permission was
very limited.
INCREASED UNDER FAIRCHILD.
One reason for this was that gov
eminent deposits were not profitable,
because until Secretary Tairchild
changed the order Of things the amount
OF deposit was not fixed and there was
no permanenoy to them, as the govern
ment checked against the balances at
will and only made deposits to the
extent Of ninety per cent. of the par
Of bonds given as security.
Secretary Fairchild, however, in
view Of the swelling surplus, not only
bought bonds literally at premiums
much higher than any fixed by Sec
rotary Gage at present. but also large
ly increased the number of deposito.
ries, raised the limit OF money to be
deposited in any one hank from $500, 900
to 8. 0oO. 0Q0 and allowed denosIts tn