The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-01-11
Shows There Is No Basis for the s'Yel-
low Charges and Insfnuations
of Sulzer, Allen, EFT Al.
NO FAvORITISM TO BANKS
MONEY DEPOSITED IN THEM TO
AVERT FINANCIAL sTRINGENCY.
National City, of New York, Selected
for Good Reasons-SaIe of the New
York Custom House.


lutions recently introduced in the Senate
by Mr. Allen, of Nebraska, and in the
House by Mr.. Sulzer, of New York. The
text of his reply. which is an exhaustive
exposition of the management of that
branch of the treasury finances under his
administration relating to national bank
repositories, contains about 1900 words,
which is supplemented by reports from de-
partment officials relating to special in
quiries in the resolutions, including copies
of over 1000 letters on the subject under
consideration. In summing up his reply to
the inquiries the secretary says:
"First-That the reason for utilizing ma
tiOnal banks as repositories for public
moneys, as authorized by law when the
receipts of the treasury were exceeding
its expenditures. has been to avoid the
disturbances to business to which the with
drawal of large sums of money from active
circulation to the treasury vaults must in
evitably cause. The policy thus pursued
by me has been the established policy of
the government for many years, and a
departure from it under similar circum-
stances would certainly cause disastrous
results.
''Second-The reasons for directing the
internal revenue receipts into depository
banks at this time is that because the re-
celptS are now exceeding disbursements
from month to month, and seem certain to
do so for an indefinite time. This condi-
ton would be menace TO the business
world If assurance were not given that
this surplus would be diverted from the
treasury vaults to public repositories,
where, while secure TO the government, 1t
would remain available for business
''Third-The reason for directing all of
the internal revenue receipts to one de-
pository is that it is more convenient to
collect the receipts of numerous offices
into one place and to take the desired dis
txstz t.,
structions daily to 113 collectors. The most
convenient agency to effect such distribu-
ton is a bank which is member of the
New York clearing house
"Fourth-The reason for selecting the Ma
tional City Bank for such distributing
agency is that because at the time the
der was issued Ii was but one of two
banks which had offered bonds sufficient
to cover the amount of the daily deposit.
Its bond deposit was $4.000.000 and that of
the Hanover National Bank $l,950.500. The
National City Bank was therefore the one
most naturally chosen. OF the sixty-eight
banks applying for share of the deposits
the National City Bank, the Hanover Ma
tional Bank and three others, applicants
for over $S00,0O0 each, are the only ones out
of the siXty-eight constituting group which
which have not been supplied the full
amount for which they had offered Sc
curity.
CUSTOM HOUSE PROPERTY.
"Fifth-The custom house property was
sold to the National City Bank the high
est 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 amount it might elect above
$780, 900, which sum it was absolutely obliged
to pay. 1t exercised this option by choos-
ing to pay $32l5.OOO. leaving $4,000 yet due.
No deed will be executed until full pay
hafc mn do ba mt
was turned into the treasury by deposit in
the National City Bank, it having been
the established custom of treasury officials,
under the counsel 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
depository 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 utilized,
would have required 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. To have required its pay
ment by the National City Bank to another
designated depository would have been an
ungracious discrimination without sub
stantially changing the fact.
Finally, under my administration Of the
one bank in favor of another has been
made. Generally speaking, when an in
crease in depository banks desired all
have been invited TO qualify themselves
for receiving such money and have been
equally and equitably considered in their
respective relations to the treasury
Before proceeding to respond to the
resolution specifically Mr. Gage gives a
general 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 designated by
the secretary OF the treasury repositories
or public money. except receipts from
be prescribed by the secretary" That
statute became law June 3. 1864, and it's
first marked recognition was in the re-
funding operations of 1879. when Secre
tary Sherman thought il necessary to place
with national bank repositories sums of
money which reached as high as $259 544 645.
Secretary Fairchild in 1878, during a
period of abnormal receipts of revenue in
creased the number of deposit banks and
allowed such banks 70 accumulate bal
anceS reaching $61.546000.
DEPOSITS IN 1897.
On March 1, 1897, there were 159 national
bank repositories, holding a total of &c.
19S.410. With few exceptions these in
situations received deposits from internal
revenue collectors and RENTED to the SUBJ
treasures any surplus over the amount
OF the fixed balance which they We're
permitted TO hold The amount of public
deposits remained about the same during
the first six months of this administration.
In November began those large payments
which resulted from the highly successful
settlement of the Union Pacific Railroad
Indebtedness, payments aggregating $751;
AIS, 223. 1t was thought to be expedient as
part of this enormous transaction TO
utilize for n few days the services of de-
pository banks, with the result that at
the end of December, 1891, such deposits
had incI eased to $49.1S2. III. The reason for
;his action was to avoid the injurious eff
feet on trade and industry of a too sud-
den withdrawal from public into the
as SIS 600, 600. BY the end of May, 1898, these
public deposits had been reduced 10 $2S-
229. S59.
Soon after this the government was con-
fronted with the necessity OF raising i'm
mediately large fund for war purposes
and. acting under the authority of the
war revenue act. the people were called
on to subscribe TO an issue of $500, 600 600
of bonds. On the day the books were
opened the National City Bank, of New
York, and its associates offered to take at
par and accrued interest any part of the
bonds that might not be subscribed for by
the public and on the same day j. p
Morgan a. Co. and their associates, num-
houses of the country also subscri oed to
the entire issue of $500 ZOO, or any part
that might not be subscribed for by the
general public