The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1900-01-10

PERIOD or abnormal recelpLS OF revenue
increased the number OF depository
banks and allowed such banks to ac-
cumulate balances reaching SCI, SAC, 900.
A LITTLE HISTORY.
On March 1. 1897, there were 159 ma
tional repositories holding d total of
$16,19S,410. With few exceptions these
institutions received deposits from in
ternal revenue collectors and remitted
to the sub-treasuries any surplus over
the 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 administration. In No
vember began those large payments
which resulted from the highly success
full settlement of the Union Pacific rail-
road indebtedness payments, aggregat-
ing $5S. .448,223. 1t was thought expedi-
| ent as a part of this enormous tranSac-
| ton, to utilize for a few days the SER
vices of depository banks with the re-
| suit that at the end of December 1897
such deposits had increased to $49, 1872
/ III. The reason for this action was to
! avoid the injurious effect on trade and
1 industry of a too sudden withdrawal
| from public uses into the vaults of the
| treasury of so large a sum as $58, ,000, 000
| BY the end of May, 1898, these public
859
Soon after this the government was
| confronted with the necessity of raising
| Immediately a large fund for war pur-
! pOoCS5 e1lAQ dGLlti6 uAQGi lHE duNuOIlLy
| of the war revenue act. the people were
/ called upon to subscribe to an issue OF
/ $500, 900 900 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. P
| Morgan & Co., and their associates
numbering 15 of the greatest financial
! houses of the country also subscribed
! to the entire issue of 5000, 900 900, or any
| part that might not be subscribed for
! by the general public.
FEELS SOME PRIDE
1t will be readily recognized that the
! absorption of 5000 100000 within the
/ space of a few weeks could not fail to
| disturb most seriously the general bus
| mess of the country. The secretary of
! the treasury feels some measure of just
! pride that the financing of the war loan
of 1898 was accomplished without the
slightest interruption to that revival
| of commerce and the industries of the
country which has made the present a
| period of unexampled prosperity
BY the end of 1898 the number of ma
| tiOnal banks repositories had been in
| creased to 316, located in 43 states and
territories and holding 1914, $50, 900. The
| New York banks were able to control
! more bonds and qualify themselves in
| larger proportions than the banks in
| the interior cities. With a view to Sc
| the funds. the secretary early in 1899
| designated 40 or so additional deposi-
tories, and while thus increasing the
! repositories outside of New York city
| he at the same time drew down the bal
ances in the New York city banks.
SOURCE OF APPREHENSION.
With the beginning of the present fis-
I cal year the treasury was feeling the
/ influence of the revival of commerce.
4 For the six months ending v$Ith Decem-
/ her ~ ISQQ the n Mt
/ expenditures aggregated $21, ops 600. This
1 absorption of money from an active use
| into the treasury where it could serve
| no present useful purpose, was a source
| of apprehension to the public and of
anxiety to the department. The
situation was intensified by the
| fact that the fall movement of currency
| to the interior for the movement of
| crops, operated to reduce the cash re-
| serves at all commercial centers. The
| secretary was indisposed TO increase de-
| pOsits in public repositories, and in or
der to avoid that he offered to antici-
pate interest on the public debt and
! later offered to buy $4,000 900 of bonds
J The movement toward stringency in the
! money market had assumed too great
a. momentum to be averted by such
means.
THE PANIC CAME.
December IS a financial panic oc-
CURED. Prices of investment securities
fell ruinously. Interest rates rose to
| fabulous rates and a general constric-
ton of the money market was apparent.
While this state of affairs found it's
most violent expression in the security
market it excited a state of anxiety
and alarm throughout our industrial
and commercial communities. The sit
uatiOn was believed to be so grave as
to justify the utmost interference. The
receipts of the treasury for December,
it was perceived, would exceed the ex-
penditures by seven or eight millions.
Under these conditions a peculiar re-
spOnsibility was thrown upon the treas
ury.
The statutes conferred authority to
place public money, except customs, in
designated repositories and gave power
to relieve the situation without pos
sible prejudice to the treasury's needs.
1t was therefore announced Dec Is,
that the secretary would deposit inter-
nal revenue collections with depository
banks to the amount of thirty Or forty
millions, should so much be applied
for.
HIS PRINCIPLE OF ACTION.
From this point on the secretary
makes direct answer to the congress
siOnal inquiry His principle of ac-
tion has been to so manage the receipts
and expenditures as to produce the
least disturbance in that part of the
money supply which must be at the
service of commercial and industrial
use. Since June 1, 1898 the receipts of
the treasury have amounted to eleven
hundred millions. BY the aid of deposit
tories the amount in the treasury a the
close of any quarterly period during
the time never rose more than S29 800,
600 above the average for the whole
( period. Tables presented show that
a substantial equilibrium was main
tanned al all times between the relation
to the supply of money in the treasury
and the supply in commercial uses.
Taking up the history of the govern
ment's connection with the Hanover
National City banks specifically in
4 quired into by the resolution, the secre-
tary shows that the National City
bank was appointed a depository July
q, 1894. It was used as a, depository
for internal revenue collections until
the bond sale in 1885, when the then
secretary of the treasury deemed it ad-
visable to use that bank together with
I four others, as repositories and about
S23. 600 was deposited with these
, banks. When another issue of bonds
4 Ahcnr,