The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1900-01-16
SECRETARY CAGES REPLY
To Resolutions Of Congress- as to De-
po-i5 of Treasury ruIJs in National
Banhs.

pO-iJ of Treasury runIS in National
Banks.
Washington, J-nuary 10.-Secretary
Gage today sent 10 congress his replies
to the resolutions recently introduced
in the senate by Mr.. Allen, of Nebras-
ka, and in the house by Mr.. SuIzer, OF
New York The text of his reply,
which is an exhaustive exposition OF
the management of that branch of the
treasury finances under mis- admins
IratiOn relating to the national deposit
tories, contains about 5000 words,
which is supplemented by special re-
ports from department officials rel
alive to special inquiries in the reso-
buttons, including copies OF over 1000
letters on the subject under consider
alton.
In summing up his reply 10 the in
quiries the secretary says:
Il That the reason for utilizing ma
tionaI banks as d~epCsitaries for pub
lie moneys, as authorized by law, when
the receipts Of the treasury were ex-
ceeding the expenditures, has been TO
avoid the disturbance TO business which
h withdrawal Of large sums Of money
from active circulation TO the treasury
vaults u inevitably auSe. The poll
cy thus pursued by me has been the
established policy OF the government
for many years, and a departure from
il under similar conditions would GER
tainly cause disastrous results.
-. The reason for directing the in
ternal revenue receipts into depositary
banks at this time is that the
are now largely exceeding dIsburse-
mencs from month 20 month, and seem
likely TO do so for an indefinite time.
This condition would be a menace to
the business world if assurances were
49, rf~l- -Ln~ -Es- -r---I,,n H-a,,T1 -
diverted from the reasury vaults TO
public aepOsitaries, where, while Sc
cur to the government, 1T wOul re-
main available to business use.
20. The reason for directing all of the
internal revenue receipts TO one depOs-
iJary was that il is more convenient
20 first collect the receipts at numer
Gus offices into one place, and make
the desired distribution from it, than
TO give new institutions daily to 113
collectors. The most convenient agen-
cy TO effect such distribution is a bank
which is a member Of the New York
clearing house.
Il. The reason for selecting the Ma
tiOnaI City bank as such distributing
agent was that at the time the order
was issued it was one of but two banks
which had offered bonds sufficient to
cover the amount of the daily deposit.
Its bond deposit was 81, 200, coo n that
of the Hanover national bank $780,
800. The National City bank was, there
fore, the one most naturally chosen.
OF the sixty-eight banks applying for
a share of the deposits, the National
City bank, the Hanover national ank
and three others, applicants for over
$500, 900 each, are the only ones out of
the sixty-eight constituting group one,
which have not been supplied the full
amount for which they had offered
security.
IS. The custom house property was
sold to the National City bank, as the
highest bidder, on July 3, 1899. Under
the terms of the sale it had the option
of paying in cash all of the purchase
none at any time, or any part of it
Il might elect above $3.50, 900, which sum
is was absolutely obliged to pay. 1t
exercised this option by choosing to
pay 1925 600, leaving $4,000 yet due.
No deed will be executed until full
payment has been made.
The payment received was turned
into the treasury by deposit in the Ma
JiOnal City bank, III having been the
established custom of treasury officials
under the counsel of their legal ad-
visers, supported by decisions of the
supreme court. to consider moneys on
deposit to the credit of the treasurer
Of the United States in designated de-
pOSitarieS as moneys in the treasury.
This deposit was made in a depOSftary-
bank for the same reason that other
deposits have been made in them, viz,
because to withdraw the currency into
the vaults of the treasury. where it
was not needed and could not be utiliz-
ed. wOul have required a withdrawal
of credit that was being extended in
commercial circles, and to that extent
a disturbance to the natural order Of
business would have followed. TIC have
required its payment by the National
City bank to another designated de-
pOsitary would have been an ungra-
cious discrimination without substan-
TALLY changing the fact.
Finally, under my administration
of the treasury department. no discrim-
inatiOn in favor of one bank, against
another has been made. Generally
speaking, hen an increase in deposit
tary banks was desired, all have been
invited to qualify themselves for re-
ceiviEg sue money, and have been
equally considered in their respective
relations to the treasury"
Mr.. Gage gives a general review OF
his policy as to national bank deposit
taries, details the successful financing
of our Spanish war oar and say that
with the beginning of the present ifs
cal year the treasury vas feeling the
Influence of the revival of
Fol- he six months ending with De-
cember 81, 1899, the excess of receipts
over expenditures aggregated $21,026,-
900. This absorption of money from an
active use into the treasury, where it
could serve no present useful
caused great public anxiety. The sit
uatiOn was intensified by the fact that
the fall movement of currency to the
interior. for the movement of crops,
operated to reduce the cash reserves
at all commercial centers. To avoid
increasing deposits in public deposita-
ries the secretary offered to anticipate
interest on the public debt; and later
offered to buy s25, 900, 900 of bonds. but
the stringency had become too great to
be averted by such means. December
18th a financial panic occurred. Prices
of investment securities fell r~uinously
and the situation became so grave as
to justify the utmost interference. The
receipts of the treasury for December,
ii was perceived, would exceed the eX-
~z,I;Er-aS nv SoJan ~ liOhr millions