The age-herald., 1900-01-11
People Called Upon

fronted with the necessity of raising im- mediately large fund for war purposes, and acting under the authority of the war revenue act the people were called upon to subscribe to issue of $200,000,0 coo of bonds. On the day the bids were opened the Ma tfonal City bank, of New York, and its as- sociates offered to take at par and ac- crued 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 associates, numbering fifteen of the clearing house, also offered to buy the entire issue of $20000000O or any part that might not be subscribed for by the general public. It will be readily recognized that the absorption of $20O,000,000 within the space of few weeks could not fail to dis tur'b most seriously ehe general business of the country
 The secretary of the treasury feels some measure of pride in financing for the war loan of 1898. It was accomplished without the slightest interruption to the commerce and industries of the country which has made the present pof-ied one of unexampleo prosperity.
 By the end of 1898 the number of national bank depostaries was S16, located in thr- ty-three states and territories, holding $94.- S6O,0O0. The New York banks were able to control more bonds and to qualify them- selves in larger proportions than the banks in the interior cities With a view to se- curing more equitable distribution of the funds, the secretary, early in 1899, designa- ted forty or fifty additional Repositories, and while thus increasing the Repositories outside of New York. he at the same time drew down balances in the New York city banks.
 Revival of Commerce
 At the beginning of the present fiscal year the treasury was feeling the influence of the revival of commerce. For the six months ending with December 31. 1S99 the excess of receipts over expenditures aggre- gate $21,026,000. This absorption of money from inactive use into the treasury where it could have no useful purpose was source of apprehension to the public and of anxiety to the department. The situa- tion was intensified by the fact that the fall r-oVement of currency to the inteior for. the movement of crops, operated to reduce the cash reserve at all commercial centers. The secretary was indisposed to increase deposits in public depositaries, and in or der to avoid that he offered to anticipate interest on the public debt, and later or fered to buy s25, 100000 of bonds. The movement toward strdngency in the money market had assumed too great momen- tum to be avoided by such means.
 On December IS financial panic occur red. Prices of investment securities fell ruinously and a general contraction Of the money market was apparent. While this state of affairs found its most violent ex- pression in the security market 1t excited Q state of anxiety and alarm throughout our industrial and commercial communi- ties. The situation was believed to be so grave to justify the most prompt inter- ference. The receipts of the treasury for December, 1t was perceived, would exceed the expectations by several millions. Un- der these conditions a peculiar responsibli- ty was thrown upon the treasury
 The statutes conferred authority to place all money, except customs, in deslg- mated depositaries and gave power to re- ncCtN N1n al dice to the treasury's needs. It was, there fore, announced on December IS that the secretary would deposit internal revenue collections with depositary banks to the amount of $30, 900 900 or $40,000,0D0, should 70 so much be applied for.
 Makes Direct Answer
 From this point the secretary makes direct answer to the congressional inquiry. His principle of action nas been to so man. age the receipts and expenditures in that part of the mony supply which must be at the service of commercial and indus trial use. Since June 1, 1898, the receipts of tine treasury have amounted to $1,100,- 100000. By the aid of depositaries the amount in the treasury at the close of any quarterly period during the time never rose more than $29500,OO0 above the aver az for the whole period.
 Tables presented show that substantial equilibrium was maintained at all times OelWt6U IHe TelallOn 10 the Supply or mo- ney in the treasury and the supply in com- mercial use
 Taking up the history of the govern ment's connection with the Hanover Ma tional and the National City banks, specifi- cally inquired into by the resolution, the secretary shows that the National City bank appointed depositary July 21, 1894. It was used as deposftary for in ternal revenue collections until the bond sale in 1895, when the secretary of the treasury deemed it advisable that that bank, together with four others, should be designated regular depositares, and about $23 100000 was deposited with those banks. When another issue of bonds was made in February, 1896, the then secretary of the treasury again used the City Ma tiohaI bank and the Hanover National bank as Repositories, each for nearly $10,- GOO. GOO.
 Late in 1897 more than $SS, GOO, 900 wa- to be paid into the treasury as the result of She Union Pacific settlement. To avoid the transfer of so large sum from public uses to the treasury vault the New York banks were invited to qualify as tempora- " depositaries. Eight banks so qualified, the National City for $24,OOO,O0O, and others for smaller amounts These deposits were gradually withdrawn by transfer to the sub-treasury until the several balances were finally discharged.
 The War Loan
 When the $200 900 900 war loan was made '. It was seen that the paying into the treas ury of such a sum could not be otherwise than a dangerous thing for the public in- terests and a useless thing to the govern ment finances. The treasury announced to the national banks its desire to place tenn porarily on deposit a portion of this amount, and all banks were invited to oual- ify as temporary depositaries. All applica- tions were accepted None were refused. The National City bank deposited $11 100000 bonds and received balance never larger than $11 ,000,O 900.
 The connection of the National City bank with the sale of the old custom house property in New York is described in A. memorandum prepared by the supervising architects ofice1 In that connection, how ever, the secretary calls attention to the aI- lega tion that he has violated the law by de- when the proceeds with bank depos!tary when the act decreed that the proceeds