The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1900-01-11
Explains the Whole Machinery Of Government Deposits
invarious Banks Designated for the Purpose.
No Discrimination Pacced and the Reason the National City Bank
Was Chosen Principal Depository Was Because
Put Up $4OOOOOO in Bonds.

ate bv Allen and in the house by Sulzer.
Of New York. The text Of his reply. which
is an exhaustive exposition of the man
agement of that branch of the treasury
finances under his administration relating
to national bank repositories, contains
about 1900 words, which Is supplemented
by special reports from department Off,
cials relative to the special inquiries In
the resolutions including copies of over
a thousand letters on the subject under
consideration. In summing up his reply
to the inquiries the secretary says
why the Banks Were Used.
"First-That the reason for utilizing ma
tiona1 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
disturbance to business which the with
drawal OF large sums of money from ac"
tive ejaculation to the treasury vaults must
inevitably cease. The policy thus pur-
sued by me has been the established policy
of the government for many years, and
departure from II under similar condi-
tions would certainly cause disastrous re-
suits.
Receipts Exceed Disbursements.
"Second-The reason for directing inter-
nal revenue receipts into depository banks
at this time is that the revenues are now
largely exceeding the disbursements from
month to month and are likely to do 80
for an indefinite time. This condition
would be a menace to the business world.
IL the assurance were not given that this
surplus would be diverted from the treas
ury vaults to pubic repositories. where.
while secure to the government, 1t would
remain available to the business world.
Why One Depository Was Selected.
"Third--The reason for directing all in
ternal revenue receipts to one depository
was that 1t was more convenient to collect
the receipts Of one office in one place. and
the desired distribution from it. than to give
instructions daily to 113 collectors. The most
convenient agency to effect such dfstribu-
ton Is a bank which is member of the
New York clearing house.
National city offered Suhicient Bond
''Fourth--The reason for selecting the Ma
tional City bank as such distribution agent
was that at the time the order was issued Il.
was one 81 but two banks which had o.
fered bonds sufficient to cover the amount
of the daily deposit. The National City's'
bond deposit was $4,oooooo, that Of tho
Hanover National was $1.750, 900. The form
er was naturally chosen. OF the sixty
eight banks applying for a part Of the
deposits, the National City bank, the Han
over National bank and three other appli-
cants fer over $S,00O.000 each. are the only
ones out Of the sixty-eight constituting
group one which have not been sup
piled the full amount for which they had
offered security
sale of Custom House Property.
"Fffth-The customs house property was
sold to the National City bank as the high
est bidder. on July 3. 1899. Under the terms
Of the sale it had the option of paying i'm
cash all of the purchase money at any
time, of any part 1t might elect above
S75O,OO0 which sum It was absolutely
obliged to pay. 1t expressed this option by
choosing to pay $3.2l5.0O0. leaving $4,000 yet
due. No deed will be executed until the full
payment has been made. The payment
received was turned into the treasury. Of
ficials, under counsel of the legal advisers.
supported by the decisions Of the supreme
court, consider moneys on deposit to the
credit Of the treasurer of the United
States in designated Repositories as money
in the treasury. This deposit was made in
the 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 1t was
not needed and could not be utilized, would
have required withdrawal of credit
that was being expended in commercial
circles and to that end disturbance to
the natural order Of business would have
followed. To have required its payment by
the National City bank to another desig-
mated depository would have been an un-
gracious discrimination, without substan-
TALLY changing the fact.
No Determination Ever Practiced.
"FfnalIy, under my administration Of the
treasury department no discrimination in
favor OF one bank against another has
been made. Generally speaking, when an
H. H. ~AtA Inr.I .Irc IAc vnd
all have been invited to qualify them
selves for receiving such money. and have
been equally and equitably considered in
their respective relations to the treasury.
Review of His Whole Course.
Before proceeding to respond to the
resolution specifically, Secretary Gage
gives a general review Of his whole course
in the branch of public finances concerned
with national bank repositories as fol-
lows:
He notes the provisions Of the statutes.
which make "all national banking asso-
Citations. designated for that purpose by
the secretary OF the treasury, repositories
Of public money except receipts from
customs, under such regulations as may
be prescribed by the secretary"
The statute became law June 8, 1864,
and its first marked recognition was in
the refundng operations OF 1873. when
Secretary Sherman thought 1t necessary
to place with national bank repositories
sums OF money which reached as high as
s27a 544,645 Secretary Fairchild. In 1SS7-SS.
during a period of abnormal receipts of
revenue, increased the number of depos-
itory banks and allowed such banks to
accumulate balances reaching S6l.546.0o0.
On March !, 1897 there were 159 national
bank repositories holding total Of sl5,-
100, 49,
With few exceptions, these institutions
received deposits from internal revenue
collectors and remitted to the sub-treasur-
les any surplus over tine amount OF the
6 per cent. balance which they were per-
mitted to hold. The amount of public
deposits remained about the same during
the first six months of this administra-
tion. In November began those large
payments which resulted from the highly
successful settlement Of the Onion Pa