Virginian-pilot. (Norfolk, Va.) 1898-1911, 1900-01-04
WINDOW FEhRED
THE REPOSITORIES
Views Of Harrison Secretary Of the Treas
ury Recalled BY Cages Reversal
Of Policy.

i TiSon contest Oh 1888, ana lnter was re-
ferred to as one OF the contributing
causes Of the monetary strinsency of
1890. which eliminated in the collapse
of Barring Brothers, of London, the
crash CT the North American Company
here, and the carrying down of
score Of stockholders.
| Compared with the present volume of
| public deposits, approximately $S0.00O.-
900. Secretary Fairchilds use of depos-
tory banks was limited. Thus, on jan
uary 1, 1857, there was about 100000
public money on deposit in the banks.
] In December. 1887 the amount-had-in
creased to S52.199.917. while the maxi
mum in April, 1888. was s6l.921,294.
SECRETARY WINDOWS VIEWS.
When President Harrison was lnau-
gurated and had appointed his Cabinet,
| Secretary of the Treasury Window an
nounced hisl intention of reducing the
| amount OF public deposits to $50 900. 900.
In October. 1880, he had succeeded in
| bringing the total down to si7495. 479.
Mr.. Window was very severe on the
manner in which the previous admins
tration had acted regarding the depos-
tory banks and wrote thus of 1t in the
| finance report Of 1889:
1.-THE national bank repositories have
been and are useful auxiliaries OF tho
sub Treasury system, but the deposit
of public funds Herewith to an amount
| largely in excess of the needs of the
public service is contrary to the spirit
OF the act of August G. 1876, which con-
templates a sub-Treasury independent
OF the banks.
ut necessarily involves temptations
| to favoritIsm Of the most Objectionable
character
| ut makes the Treasury more or less
dependent on the banks. OIL account OF
the difficult and delicate task OF with
drawing the deposits when wanted
without creating serious disturbances
of financial conditions.
MOST DANGEROUS POWER.
ut involves the exercise Of most
dangerous power by the Secretary.
whereby he may, IL so disposed, expand
or contract the currency at will and in
the interest OF certain favorites whom
he may select.
ut IS grossly unjust to the govern
| ment to grant the free use OF money
| while 1t pays to the very parties thus
| favored four and four and one-half per
| cent. interest on its own bonds. which
are pledged as security for the money
| thus received.
1T Is manifcstly unfair to the people
| to give the banks the use OF their
money. while they are required by the
banks to pay from six to eight per
cent interest on It.
DIFFICULT AND DANGEROUS.
bad as these features of such pol
| lty are, n more serious objection is
found in the difficulty and danger en-
courtercd in the withdrawal of such ex-
cessivc deposits. Money thus deposited
goes at once into the channels of trade,
and business is adjusted 10 the in
creased supply.
"a sudden or injudlcious withdrawal
would be felt far more seriously by the
large class OF business borrowers than
by the banks. The latter arc money
lenders, and n stringency may only in
crease their rates and add to their
profits while the former, having based
their business ventures upon the ac-
commodations offered by the banks.
may be utterly ruined when such &C
commodations are suddenly With
drawn"
AS WALL STREET SEES 1T.
1t Is in recalling these expressions
that Wall streets interest is so greatly
excited at the present time in Secretary
Cages action. One reason is that the
methods which even he condemned to
obtain public money have given way to
| ones even less defensible. For instance,
under Secretary Tairchild not more
| than 81 600, 900 was placed with any one
bank, while during the present admin
| istration n single bank has held as high
during the present year as s17,000.000.
Moreover, under Secretary Fairchild.
| and until quite recently, the banke
| which received the public money own
ed their bonds deposited as security out
right. At present large sums are de-
posted against bonds borrowed and hy-
pothecated with the government. This
feature, while OF recent date. IS not IL
legal, for on reference to the act per-
mitting banks to become government
repositories 1t will be noticed that no.
thing Is said of the ownership of the
bonds. only that THE Secretary shall
require satisfactory security by the de-
| posit of United States bonds and other
wise" Under this It would even be
| possible for them to deposit railroad or
municipal bonds If the Secretary saw
| fit to accept such as security.
| The bonds which have been hypothe-
Gated are largely those owned by trust
companies, and there is nothing in the
| State law on trust companies to pre-
vent these from loaning their bonds if
! they see fit. In fact, the Clearing
House Association. in an attempt to
make Secretary Cages plan for relief
operative. by the distribution Of the in
| ternai revenue receipts among the
banks, called upon the trust companies
to loan their bonds
MR.. KTLBURN'S COMMENTS
State Bank Examiner Kilburn, speak
| ing on this subject yesterday. said:
II don't think a savings bank has any
| right to loan government bonds They
would have right to sell government
bonds either for cash or for other secu-