New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-01-04
THE DEPOSITS IN BANKS.

THE DEPOSITS IN BANKS.
The resolution introduced in the House yester-
day by Mr.. Sulzer asking Secretary Gage for in
formation concerning deposits of public money
with certain banks has been referred to the
Committee on Ways and Means, and the under
standing is that with some notifications, it
will be reported and passed to-day. Mr..
Gage is, of course, aware that 1t has not
been the Republican policy to place with Ma
tional bank repositories large portions of the
public funds held by the Treasury While he
has deemed it advisable in the existing state of
things to increase materially the number of
authorized repositories and the amount of pub
lie money deposited with them it may be pre-
sumed that he has not adopted this course with
the idea that the deposits will be permanent
or continue beyond the emergency which he
thought sufficient to justify them. The question
is by no means new one. More than sixty
years ago intense party feeling was aroused re-
garding the relations of the Government with
the banks. and after the act of June 3, 1864,
authorized the designation of National bank de-
positories the deposits were for about twenty
years strictly confined TO sums needed by the
Government for various purposes in different
sections, and the number of banks designated
was small. But under Mr.. Cleveland's Admin
istration different policy adopted by Sec
rotary Fairchild, who increased the deposits in
banks from $20000O00 to nearly S62,OOO,OOO.
Strong public feeling was aroused by this
course and 1t became matter of intense Oppo-
sition to the Cleveland policy in the campaign OF
1888. After his defeat and the inauguration of
Mr.. Harrison Secretary Window in his report of
December, 1889, page IS, set forth many objec-
tons to the policy, saying:
The deposit of public funds to amount
largely in excess Of the needs of the public ser
vice is wholly unjustifable. Such a policy is
contrary to the spirit of the act of August q,
1876 which contemplates a Sub-Treasury indie
pendent Of the banks.
1t necessarily involves temptation to favorit-
ism of the most Objectionable character.
1t makes the Treasury more or less dependent
upon the banks. account of the difficult and
delicate task of withdrawing the deposits when
wanted without creating serious disturbance OF
financial conditions.
1t involves the exercise of a most dangerous
power by the Secretary of the Treasury, where
by he may if so disposed, expand or contract
the currency at will, and in the interest of GER
tain favortes whom he may select.
1t is grossly unjust to the Government to
grant the free of it's money, while it pays
to the very parties thus favored and Az per
cent interest on it's own bonds which are pledged
as security for the money thus received.
There seems to be no excuse for this policy
when the Treasury could use the same money
in the purchase of bonds, and thereby return it
to circulation and save large part of the in
terest
1t is manifestly unfair to the people to give
the banks the use of their money for nothing.
while they are required by the banks TO pay
from to per cent for It.
Bad these features of such policy are,
more serious objection is found in the difficulty
such excessive deposits. Money thus deposited
goes at once into the channels of trade. and
business is adjusted to the increased supply A
sudden or injudicious withdrawal would be felt
far more severely by the large class of business
borrowers than by the banks The latter are
money lenders, and stringency may only in
the former, having based their business vent
upon the accommodations afforded by the
banks may be utterly ruined when such accom-
modations are suddenly withdrawn.
Secretary Window then recited the conse-
Quences of deposits under the Administration of
Jackson which resulted in the terrible panic of
1897, and added: Had the warnings of history
been needed, the present Administration might
have been saved from one of its greatest in
"herited embarrassments for which it is in no
"sense responsible"
Secretary Window was eminently successful
in his financial management and earned the
gratitude of the country by his wisdom in re-
ducing the interest on the public debt. His
tragic death at the close of his speech at din
ner of the Chamber of Commerce here was pro-
foundry regretted by multtudes. His reason
ings are as forcible now as they were in 1889,
and 1t is but just to say that they gain new
force from the immediate consequences of the
reversal of his policy by Secretary Gage, as it is
understood by the Street TO be the adoption of a
different policy. One Of the first effects is the
charge of favoritsm in selection of depository
banks and the assignment of deposits. However
groundess the charge, it forcibly illustrates the
possible influence of such operations respects
public confidence in the Administration.
The deposits which have been made are not
yet large enough to do much harm except
through the prevailing belief that they to be
continued and increased. That belief has mate
rally helped 10 produce such revival of specu-
lation and such an increase In loans for specua-
tive purposes that much of the costly benefits
gained by contraction OF such loans late In the