Omaha daily bee., 1900-01-11
GAGE ANSWERS RESOLUTIONS
Advances Good Reasons for Depositing
Money in National Banks,
PREVENTS SERIOUS DANGER TO TRADE
National city Bank Gets the Largest
Portion Because II Deposits
the Largest Amount
of security.

of security.
WASHINGTON, Jan. 10.-secretary Gage
today sent to congress his replies to reso-
lutions recently introduced in the senate
by Allen of Nebraska and in the house
by Sulzer Of New York. rho text Of his
reply, which is an exhaustive exposition Of
the management OF that branch Of the treas
ury finances under his administration relat-
ing to national bank repositories, contains
about 5000 words, which is supplemented
by special reports from department officials
relative to special inquiries in the resolu-
lions, including copies Of over 1000 letters
on the subject under consideration. In sum
ming UP his reply to the inquiries the sec
Rotary says:
"First-That the reason for utilizing ma
tional banks as repositories for public mon
eys, as authorized by law, when the receipts
of the treasury we're exceeding its expendi-
lures. has been to avoid the disturbance to
business which the withdrawal of large sum
OF money from active circulation to the
treasury vaults must inevitably cause. The
policy thus pursued by me has been the es-
tablished policy of the government for many
years and a departure from it under similar
conditions would certainly cause disastrous
results.
"Second-The reason for directing the in
ternal revenue receipts into depository banks
Mt this time is that the revenues are now
largely exceeding disbursements from month
TO month and seem likely to do so for an in
definite time. This condition would be a
menace to the business world If assurance
were not given that this surplus would be
diverted from the treasury vaults to public
repositories where. for while secure to the
government, it would remain available to
business use.
Done for Convenience.
"Third-The reason for directing all of the
Internal revenue receipts to one depository
was that it is more convenient to first col
lect the receipts of numerous offices into one
place and to make the desired distribution
from 1t, than to give new instructions daily
to 113 collectors. The most convenient
agency to effect such distribution is a bank
which is a member of the New York clearing
house.
"Fourth-The reason for selecting the Ma
tioual City bank as such distributing agent
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 deposits. Its bond deposit was S4,-
GOO, 900, and that of the Hanover National
bank 81, $50, 500. The National City bank
was, therefore, the one most naturally
chosen. or the sixty-eight banks applying
for a share of the deposits the National
City bank, the Hanover National bank and
three others. applicants for over 100000
each, are the only ones out of the sixty
eight constituting group one which have
mot been supplied the full amount for which
they had offered securities.
"Fifth-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 money at any time,
or any part it might elect above $750,OO0
which sum 1t was absolutely Obliged to pay.
Ut exercised this option by choosing to pay
SO, 215, 900, leaving $50, 900 yet due. No deed
will be executed until full payment has been
made.
Same Motive ms Other Deposits.
The payment received was turned into the
treasury by deposit in the National City
bank, 1t having been the established GUS
tom of treasury officials, under the coun-
sci of their legal advisers, supported by
decisions of the supreme court, to consider
moneys on deposit to the credit of the
treasurer of the United States in designated
repositories as moneys in the treasury.
This deposit was made in a depository bank
for the same reason that other deposits
udNS btNh hiuuO III NiShi' wa bSNiuot W
withdraw the currency into the vaults of the
treasury, where is was not needed and could
not be utilized, would have required a with
drawal of credit that was being extended
On commercial circles and to that extent a
disturbance to the natural order of business
would have followed. To have required it's
payment by the National City bank to an
other designated depository would have been
an ungracious discrimination without sub
stantially 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 in
crease in depository banks was desired, all
have been equally and equitably considered
an their respective relations to the treasury"
Before proceeding to respond to the resolu-
tion specifically, Secretary Gage gives a gen
eral review of his whole course in the
branch OF public finances concerned with
national bank repositories, as follows: He
notes the provisions of the statutes which
make "all national banking associations
designated for that purpose by the secretary
of the treasury repositories of public moneys.
except receipts from customs, under such
regulations as may be prescribed by the sec
g~etary,"
That statute became a law June 3, 1864.
ana lS nTSt marked recognition was In the
refunding operations of 1879, when Secretary
Sherman thought it necessary to place with
national bank repositories sums of money
which reached as high as $279, 544, 645. Sec
rotary Fairchild in 1SS7-SS, during a period
of abnormal receipts of revenue, increased
the number OF depository banks and allowed
such banks to accumulate balances reaching
SOL, SAC, 900.
Money Piles Up.
o March 1, 1897, there were 159 national
bank repositories holding a total of SIG
a9s,4lO, With few exceptions, these insti-
buttons received deposits from internal rev
enue collectors and RENTED to the sub
treasures any surplus over the amount of
the fixed balance which they were per-
united to hold. The amount of public de-
posts remained about the same during the
first six months OF this administration. In
November began those large ayments which
resulted frCm the highly successful settle
ment OF the Union Pacific railroad indebted
hess payments, aggregating SOS, 44S, 223. Ii
TOO MUCH MONEY.