The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-10-03

A NEEDED FINANCIAL REFORM.
The recent action of Secretary Shaw re-
leasing the Is per cent. cash reserve mere
tofore required to be held against govern
ment deposits in national banks Is uni
approved by bankers and business
men as good practical financiering. There
never any good reason for requiring
the banks to hold cash reserve of % per
cent. against deposits which were already
secured, dollar for dollar, by deposit OF
government bonds. The effect of the re-
quirement was to tie up % per cent. of
the amount of government deposits, there
by lessening the resources of the banks
and their ability to accommodate the peo-
pie and aid business by just that much.
1t follows, of course, that the effect OF
the amount thus heretofore tied up and
add that much to the live circulation of
the country.
The general approval of the secretary's
action and its quick effect in relieving the
money market furnishes a strong argu-
ment for abolishing the subtreasury sys-
tenn. AS this system is now conducted
there are branches of the United States
treasury, called subtreasuries, at New
York, Boston. Philadelphia, Baltimore.
Chicago, Cincinnati, San Francisco, st.
Louis and New Orleans. They serve no
useful purpose whatever. except as de-
positories of public moneys and perform
ing certain functions which could be bet
ter performed by the banks. The public
money would be as safe in the custody of
the banks as it is in the vaults of the sub
treasures, where it is withdrawn from
business and tied up as effectively as If
it were buried i'm the ground. There is
probably real need Of subtreasury at
New York, but all the rest could be abol-
jshed with positive advantage to the bust
saving in salaries and expenses to the gov
eminent. The primary purpose of the es-
tablishment of the subtreasuries, nearly
sixty years ago, was the safety of the
public money. That was commendable
object, but the reasons which existed for
exist for its continuance. Safety of the
public money is necessary it
ever was, but ii can be secured in other
ways than by withdrawing it from trade
and locking ii UP in vaults which are GER
tainly no safer than the vaults of most
banks. In 1854, eight years after the en-
actment of the subtreasury law, there was
depository for public money at Jeffer-
sonville, this State. and a special agent
of the treasury who was appointed to
examine the condition of the various SUBJ
treasures made a report in which he de-
scribed the depository at Jeffersonyille as
follows:
The chief tavern of the town was the
building believed to afford the best security.
was made depository OF the United
States. Immediate access from the bar
r rSSs;n to ,t the , depository was shut off by
as further security, the partition wall was
lined with boards: but, the glass lights
in the communicating door were left I'M
covered in order that the keeper of the
public treasure might. when in the bar
room, see into his own apartment, a de-
termined burglar could, in few min
utes. have forced his way in. The en-
back passage under a stairway. Every
person who attempted TO enter had to
stoop until he was almost double; and
then he found his further progress OBJ
structed by a grated door, fastened by an
iron chain in such a way that il could not
be opened except by force or with the
consent of the subtreasurer. When in the
depository the citizen who had business
there found it divided into two apartments
by temporary partition. One OF these
was lighted by single window, defended
by iron CRATES of no very great strength.
In this division of the room the officer
kept the chief part of his silver in boxes:
screening the boxes themselves as well as
he could from public view by covering
sembling In form a giant coffin. In the
other division of the room, being that
to which there was entrance under the
stairway, there was an iron safe, in which
the depositary kept his gold and so much
silver as he could store therein Around
| the apartment ran low gallery, construct
case of attack he might, If in danger OF
being overpowered below, retire above
and shower down upon his assailants stone
bottles or other missiles of this kind, OF
which he had provided an abundant store
He slept in this room. and guns, pistols
and pixies completed his assortment OF
| weapons, offensive and defensive.
This shows what sort of arrangements
were considered safer than banks as de-
pository for public moneys fifty years ago
The subtreasury vaults of the present day
are safe enough, but they are an evolution
of system which had its origin in Do
litical spite and financial folly, and which
If it ever had any merit, has been com
pletely outgrown by the country and by
modern business conditions. What is
needed instead Of the subtreasuries is a
system by which public money not re-
quired to be covered at once into the
treasury shall be deposited in banks where
it will be safeguarded beyond the posi-
bility Of loss. and will be benefit to the
people instead of menace to business
The abolition of the system is financia
reform imperatively demanded in the near
| future.