The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1900-01-11

the services of depository banks with
the result that at the end of Deem
Der, 1897, such deposits had increased
to s49,1S2.T17 The reason for this
action was TO avoid the injurious ef-
feet on trade and industry Of a too
sudden withdrawal from public uses
into the vaults Of the treasury Of so
large a sum as SIS, o00.o00. BY the end
of May, 1898, these public deposits had
been reduced to SIS, 23s, 359-
Fund For War Purposes.
Soon after this the government was
confronted with the necessity Of raising
Immediately a large fund for war pur-
poses and, acting under the authority
Of the war revenue act. the people were
called upon to subscribe to an issue of
$500, 100000 of bonds.
On the day the books were opened the
National City bank of New York. and
its associates offered 10 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 & c., and their associates,
numbering fifteen Of the greatest fin
ancial houses of the country alsD sub
scTibed to the entire issue Of $500 Co.,
600 or any part that might not be SUBJ
scribed for by the general public
It viii be readily recognized chat the
absorption Of 100000 600 within the
space Of a few weeks could not fail to
disturb most seriously the general bust
ness of the cOCutry. 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 AMI the industries of the
country which has made the present
period Of unexampled prosperity.
Increase Of Depositories.
BY the end Of 1893 the number Of ma
tional bank repositories had been in
creased to 316, located in foSty-tfree
states and territories, and holding s94,-
$4,000. The New York banks were able
TO control more bonds and qualify
themselves in larger proportions than
the banks in the interior cities.
With view to securing a more
equitable distribution Of the funds, the
secretary, early in 1899, designated
forty or fifty additional repositories,
and while thus increasing the deposit
tories outside of New York City. ne at
the same time drew down the balances
in che New York City banks
With the beginning Of the present fis-
cal year, the treasury was. feeling. the
influence Of the revival Of commerce.
For the six mOrths ending with Dec.
81. 1899. the excess Of receipts over eX-
pendItureS aggregated $21. ops, 000 This
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, anu Of
anxiety to the department.
Situation intensified.
The situation was intensified by the
Iact that the fail movement of cur
rency to the interior for the movement
OF cIOps, operated to reduce the cash
reserves 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 So, GOO. 900 of bonds.
The movement toward stringency in
the money market had assumed too
great a momentum to be averted by
such means
Dec. Is a financial panic occurred.
Prices Of investment securities fell
ruiROusly. Interest rates rose to fabu-
lOus rates. ana d general construction
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 the 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.
Treasury to the Rescue
The statutes conferred authority to
place public money, except customs, in
designated repositories, and gave power
to relieve the situation without possible
prejudice to the treasury's needs. It
was, therefore, announced Dec. is that
the secretary would deposit internal
revenue. collections with depository
banks to the amount of $50, 600, 600 or
$40, 000, 600, should so much be applied
for
From this point on the secretary
makes direct answer to the congress
sional inquiry His principle Of action
has been to 60 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 !, 1898, the receipts Of the treasury
have amounted to ST. 100, 100000. BY the
aid of repositories, the amount in the
period during the time never rose more
than 500 500, 600 above the average for
the whole period. Tables presented
show that substantial equilibrium was
maintained at all times between the
relation to the supply Of money in the
treasury and the supply in commercial
uses.
The Favored Banks.
liz - A. ~,
mene's connection with the Hanover
National bank and the National City
bank. specifically inquired into by the
resolution. the secretary shows that the
National City bank was appointed a
depository July Il, 1854 1t was used as
a depository for internal revenue col
lectiOns until the bond sale in 1885,
when the then secretary Of the treas
ury deemed it advisable 10 use that
bank together with four others as de-
positOries, and about $4,000 GOO was
deposited with those banks
When another issue Of bonds was
made in February. 1886. the then secre-
tary of the treasury again used the
National City bank and the Hanover
National bank as .iepositorieE, each for
nearly s10,00O000
Late in 1897 more than SOS, 000 600 was
to be paid into the treasury as the re-
suit of the Union Pacific settlement.
To avoid the transfer Of so large a
sum fTem public uses the treasury
vaults, the New York banks were in
vited to qualify as temporary depos-
itofs. Eight banks SO qualified. the
National City for $24. 000.G00 and others
for smaller amounts These deposits
were gradually Withdrawn by transfer
to the sub treasury until the small bal
ances were finally discharged. When
the $500 10000 War loan was made it
was seen that the paying into the treas
urv OF such q sum could not be other
- - . aa..aarnus thlr,a for the