The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1900-01-11
For Making Banks Deposito-
les for Funds.
AN ESTABLISHED POLICY
WOULD NOT WITHDRAW MONEY
FROM PUBLIC USE.
CHOOSING A DISTRIBUTING AGENCY
Gage Says the National City Bank Was Sc
ected Because at the Time the Order Was
issued il Was One of But Two that
Offered Sufficient Bonds.

Offered Sufficient Bonds.
Washington. Jan. 10.-Secretary Gage
resolutions recently introduced in the Sen
ate 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 mama cement of that
branch of the treasury finances under
his administration relating to national
depositaries, contains about 5000 words
which is supplemented by special reports
from department officials relative to spe-
cial inquiries in the resolutions. includ-
ing copies of over one Thousand letters
on the subject under consideration.
In summing up his reply to the inqui-
ries the Secretary says
First: That the reason for utilizing
national banks as depOsitaries for public
moneys as authorized by law, when the
receipts of the Treasury We're exceed
ing expenditures, has been to avoid the
disturbance TO business which the with
drawal of large sums of money from ac
tive circulation to the treasury vaults,
must inevitably cause. The policy thus
pursued by me has been the established
and a departure from it under similar
conditions would certainly cause disas-
trouS results.
Second: The reason for directing the
internal revenue receipts into depositary
hanks at this time is that the revenues
are how largely exceeding disbursements
from month to month. and seem likely
to do so for an indefinite time. This
condition would be menace to the bust
ness world if assurance were not given
that this surplus would be diverted from
the Treasury vaults to public depositaries,
where, while secure to the Government,
it would remain available to business
use.
Third: The reason for directing ali
OF. the internal revenue receipts to one
depositary was that it is more cOnven-
ient to first collect the receipts at num-
erous offices into ONE place and make
the desired distribution from it. than to
give new institutions daily to lib col
lectOrs. The most convenient agency to
effect such distribution is a bank which is
member of the New York Clearing
House.
WHY THIS BANK WAS CHOSEN.
Fourth: The reason for selecting the
National City Bank as such distributing
agent was that at the time the order
was issued it was one of but two banks
which had offered bonds sufficient to
cover the amount of the daily deposit
Its bond deposit was $4,000 600. and that
of the Hanover National Bank S1,9lO,ou0.
THE National City Bank was therefore
the one most naturally chosen Of the
sixt, eight banks applying for share
of the deposits, the National Clty BANK,
the Hanover National Bank anJ three
others. applicants foT over SSW'uuo
each. are the only ones out Of the slxt! $
eight constituting group ONE which have
not been supplied the full amount for
which they had offered security.
Fifth: The Custom House property
was sold to the National City Bank as
the highest bidder on July Bird, 1888.
Under the terms Of the sale it had the
oution of paying in cash all of the pur-
chase money at any time, or any part
of 1T above S70O,00O when
sum it was absolutely Obliged to pay lt
exercised this option by choosing to pay
S3.215. 600. leaving $4,000 yet due. NO
deed will be executed until full payment
he's been made.
The payment received was turned into
the Treasury by deposit in the National
City Bank. t having been the established
custom of Treasury officials, under the
counsel of their legal advisers, supported
by decisions of the Supreme court, to
consider moueys on deposit to the credit
Of the Treasurer of the United States in
designated depoSitaries as moneys IN the
treasury. This deposit was made IN a
depositary bank for the same reason that
other deposits have been made i'll 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 with
drawal of credit that was being eX-
tended in commercial circles, and to that
extent disturbance to the natural or
der of business would have followed.
TO have required its payment by the Ma
tiOnal City Bank to another designated
depositary would have been an ungraci-
onS discrimination without substantially
changing the fact.
NO DISCRIMINATION.
FINALLY, under my administration of
the Treasury Department no discrmina-
tion in favor of one bank against anoth-
or has been made: generally speaking,
when an increase in depOSitary banks
was desired, all have been invited to
qualify themselves for receiving such
money, and have been equally and
equitably considered in the irrespective
relations TO the Treasury.