Omaha daily bee., 1900-01-11

" N'%r Nv N'' NAA 70 . " e
such deposits had Increased to $40, 1S2. III.
The reason for this action was to avoid the
Injurious effect on trade and industry OF a
too sudden withdrawal from public uses into
the vaults OF the treasury Of so large a sum
as SIS, 100000. By the end Of May, 1898, these
public deposits had been reduced to sos. 2sa.-
$50.
"Soon after this the government was con-
fionted with the necessity OF raising imme-
diately a large fund for war purposes and.
acting under the authority OF the war rev.
enuc act, the people we're called upon to
subscribe to an issue Of 5000, 600, 900 Of bonds.
"On the day the books were opened the
National city bank Of New York and it's as
s~ociates offered to take at par and accrued
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 their associates, numbering fifteen OF
the greatest financial houses Of the country,
also subscribed to the entire issue Of $780,
10000 or any part that might not be sub
scribed for by the general public.
Would Disturb business.
at will be readily recognized that the
absorption OF 5000, 200, 900 within the space
of a few weeks could not fail to disturb most
seriously the general business of the couu-
try. The secretary of the treasury feels
some measure of just pride that the inan-
cling Of the war loan of 1898 was accom-
plished without the slightest interruption to
that revival Of m and the industries
of the country which has made the present
a period of unexampled prosperity.
"By the end of 1898 the number OF ma
tional bank repositories had been increased
to 316, located In forty-three states and ter
ritories and holding 1914, $50, 900. The New
York banks were able to control more bonds
and qualify themselves in larger proportions
than the banks in the interior cities. With
a view to securing a more equitable diStri-
button of the funds, the secretary, early In
1899, designated forty or fifty additional de-
positories, and, while thus increasing the
repositories outside of New York City, he
at the same time drew down the balances In
the New York City banks.
with the beginning of the present fiscal
year the treasury was feeling the influence
of the revival of m For the six
months ending with December 81, 1899, the
excess of receipts over expenditures ag-
| gTegated 1921, 026, 900. This absorption OF
money from an active use into the treas
ury, where it could serve no present USE
full purpose, was a source of apprehension
to the public and of anxiety to the depart
ment. The situation 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. The secretary was in
disposed to increase deposits in public de-
positories and, in order to avoid that he
offered to anticipate interest on the public
debt, and later offered to buy $25, 900, 900 Of
bonds. The movement toward stringency
in the money market had assumed too great
a momentum to be averted by such means.
December IS a financial panic occurred.
Prices of investment securities fell ruin
ously. Interest rates rose to fabulous rates
and a general construction of the money
market was apparent. While this state OF
affairs found its most violent expression In
the security market, it excited a state OF
anxiety and alarm throughout Industrial
and commercial communities. The situa-
ton was believed to be so grave as to
justify the utmost interference. The re-
| ceipts of the treasury for December, it was
perceived, would exceed the expenditures
by 81, 900, 900 or SIS, 900, 900. Under these con-
ditions a peculiar responsibility was thrown
upon the treasury.
THE statutes conferred authority TO
| place public money, except customs, in
designated repositories and gave power to
relieve the situation without possible preju-
dice to the treasury's needs. 1t was there
fore announced December is that the secre-
ldTS Woulu utIOSlI llltA Lhi SNNAsN NS'SN
tions with depository banks to the amount
of $50, 900. 600 or $40, 900, 900 should so much
be applied for"
From this point on the secretary makes
direct answer to the congressional inquiry.
His principle of action has been to so man.
age the receipts and expenditures as to
produce the least disturbance in that part
of the money supply which must be at the
| service of commercial and industrial use.
Since June /, 1898, the receipts of the treas
ury have amounted to 81, 100, 900, 900. BY the
aid Of repositories the amount in the treas
ury at the close of any quarterly period dur
ing the time never rose more than S29 ,5OO, 900
above the average for the whole period.
Tables presented show that substantial
equilibrium was maintained at all times be-
tween the relation to the supply of money in
the treasury and the supply in commercial
uses.
Relations With National City Bank.
Taking up the history of the governent's
| connection with the Hanover National and
the National City banks, specifically inquired
into by the resolution, the secretary shows
that the National City bank was appointed
a depository July /, 1894. 1t was used as a
depository for internal revenue collections
until the bond sale in 1895 when tho then
secretary of the treasury deemed it advisable
to use that bank, together with four others,
as repositories and about 1923, 900, 900 was de-
posted with those banks. When another is
sue OF bonds was made in February, 1896, the
then secretary OF the treasury again used the
National City bank and the Hanover Ma
tlonal bank as repositories, each for nearly
/ $40. coo, coo. Late in 1897 more than $5S, 000,-
OO0 was to be paid into the treasury as the
result of the Union Pacific settlement. To
avoid the transfer of so large a sum from
public uses to the treasury vaults, the New
York banks were invited to qualify as tenn
porary repositories. Eight banks so qualified,
the National City for 1924. 900, 900 and others
for smaller amounts. These deposits were
gradually withdrawn by transfer to the sub
treasury until the several balances were
finally discharged.
When the 5000, 600, 600 war loan was made
1t 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
forests 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, without regard to size or To-
cation, were invited to qualify as temporary
repositories. All applications were ae-
cepted. None were refused. The National
City bank deposited sl4, 600, 900 of bonds. and