The age-herald., 1900-01-11
SECRETARY CAGE
 SUBMITS REPORT Why He Used National Banks
 as DepOsitaIies' CONDITIONS MADE NECESSARY The Text of the Reply is an Ex- haustive Explanation of the Man.
 agement of That Branch of the
 Treasury-voluminOus Document.
CONDITIONS MADE NECESSARY

Washington, January 10.-Secretary Gage today sent to the congress his reply to the resolution recently introduced in the sen- | ate by Mr. Allen, of Nebraska, and in the | house by Mir. Sulzer, of New York.
 The text of his reply which is an exhaus- l tive explanation of the management of | that branch of the treasury finances under his administration relating to national bank depositaries, contains about 5000 words. and is supplemented by special reports by departmental officials relating to special in- | quires In the resolution, including copies of over 1000 letters on the subject under | consideration. In summing up his reply to | the inquiries the secretary says:
 l "First-That the reason for utilizing na- l tional banks as depositaries for public l moneys authorized by law when the re- | ceipts of the treasury were exceeding its | expenditures, has been to avoid the distur- | bance to business which the withdrawal of | large sums of money from active circula- 1 tion to the treasury vaults must inevitably cause. The policy thus pursued by me has been the established policy of the gov ernment for many years, and a departure from 1t under similar conditions would cer- tanly cause disastrous results
 "Second-The reasons for directing the internal receipts into depositary banks at this time is that the revenues are now l largely exceeding disbursements from month to morth, and seem likely to do so for an indefinite time. This condition would be a menace to the business world if assurances were not given that this sur plus would be diverted from the treasury vaults to public depositaries, where for a while secure to 1he government. it would remain available to business use.
 'Third-The reason for directing all of the internal revenue receipts to one depositary is that it is more convenient to first collect the receipts of numerous offices irJto one place, and to make the desired distribution from it, than to give new in structions daily to 63 collectors. The most convenient agency Is bank which is a member of the New York clearing house.
 Selection of National City Bank
 "Fourth-The reason for selecting the National City bank as such distributing agency was that at the time the order was issued 1t was one of but two banks which had offered bonds sufficient to cover the amount of the daily deposit. Its bond de-
 
 yer National bank s1,s5O,OOO The National City bank was, therefore the most natu- rally chosen. Of the siNty-eight banks ap- plying for a share of the deposits, the Ma tional City bank, the Hanover bank and three other applicants for over $SO0,00O each are the only ones of the siNty-elght constituting group one which have now been supplied the full amount for which they had offered security
 "Fifth--The custom house pronertv was sold to the National City bank as the high est bidder on July 8, 1899. Under the terms or the sale 1t had the option of paying in cash all of the purchase money at any. time, or any part it might elect above s75O.- GOO, which sum it was absolutely obliged to pay, It exercised this option by choosing to pay sS,215,0OO, leaving s5OOOO yet due. The payment received was turned into the treasury by depositing it in the National City bank, it having been the established custom of treasury officials, under the counsel of their legal advisers, supported by decisions of the. supreme court. to con- slider money on deposit to the credit of the treasurer of the United States in designated depositaries as many in the treasury. This deposit was made in depositary bank for the same reason that other deposits have been made in them, viz: Because to with draw the currency into the vaults of the treasury where it was not needed and could not be utilized would have required a with drawal of credit that was being extended in commercial circles, and to that extent dis turbance to the national order of business would have followed. To have required it's payments by the National City bank to an- other designated depositary would have been an ungracious discrimination without substantially changing the fact. Finally, under my administration of the treasury department, no discrimination in favor of one bank against another has been made. Generally speaking, when an increase in depositary banks was desired, all have been invited to qualify themselves for receiving such money and have been equally and equitably considered in their respective re- latlons to the treasury
 General Review
 Before proceeding to respond to the reso- lution specifically, Secretary Gage gives general review of his whole course in the branch of his financial connection with bank depositaries as follows:
 He notes the provisions of the statutes which make all national banking asso- citations designated for that purpose by the secretary of the treasury depositaries of public money except receipts from cus- toms, under such regulations as may be prescribed by the secretary.
 That statute became law June 3. 1864, and it's first marked recognition was in the refunding operations of 1879, when Secre- tary Sherman thought It necessary to place with national bank depositsries, sums of money which reached as high as s379 9544,- 645. Secretary Fairchild, in 1SS7-'ss, during a period of abnormal receipts of revenue increased the number of depositary banks