The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1902-11-19

mean that the banks may put up
municipal bonds against the Govern
ment balnces. This seems to me a
dangerous precedent and serious mis-
Interpretation A less able and less
wise man than Mr.. Shaw might in time
to come, with the present Secretary's
precedent guide him. allow the banks
to deposit railroad bonds as collateral,
and if railroad bonds, why not farm
mortgages? Why, If NJ. Bryan or one
of his stripe should be elected, his Sec
rotary of the Treasury might elect to
accept waehouse receipts. The law in
question was passed during the war,
and those two words. and otherwise
mean that the Secretary of the Treas
ury might take additional security, not
other security. The law does not read
Government bonds, or otherwise Mr..
, Shaw's Interpretation may have serious
consequences because it opens the way
for the abuses 1 have pointed out
We agree to all that Mr.. Schiff says
in the foregoing paragraph, but we do
not apprehend any loss Of money to the
| Government in consequence of the Sec
retary's disregard of the law in this
particular. Another law gives the Gov
eminent a paramount lien on all the
assets of national banks for any dues
to itself, and this provision would I'M
doubtedly protect the Government even
If no collateral security whatever were
taken for deposits. 1t is safe to as
sumo that the Secretary will exercise
as much prudence in placing his de-
posts as a private individual would in
! handling equal sums of money. Now,
| if Mr.. Carnegie, or Mr.. Rockefeller, or
Mr.. Schiff, were secured, when placing
money on deposit in banks, in the same
way that the Government is, so that in
case of the failure Of bank they could
exhaust the entire assets and the
stockholders liability before any other
| depositor could get penny is it imag
| Unable that the persons so favored
would ever lose anything by a bank
! failure? Assuredly not. The require
ment of Government bonds, or NUM-
cipal bonds, or farm mortgages, or
warehous receipts, or the I. o. U. of
! Wilkins MicaWber, is alike unneces-
sary.
The possible harm to flow from the
| Secretary's action will come in a diff
ferent channel. 1t will result from a
! growing contempt for the laws of the
land; and this, If countenanced by the
( highest officers of the Government,
! may break out anywhere, and may take
; the most unexpected forms. 1t Is not
open to doubt that the act of Congress
| governing deposits of public money in
I banks makes one kind of security in
dispensable, and that is United States
bonds. Security may be taken in addi-
ton to it, but not In substitution for 1t.
This has been the Interpretation of the
law by every Secretary since it was
passed, until now. Such was the in
depreciation given to it in Congress
when 1t was under debate. Such was
apparently the Interpretation of Secre-
tary Shaw himself only few days be-
fore he announced the new rule.
! 1t will be the duty of Congress,
early in the coming session. to inquire
in courteous terms why this uniform
Interpretation of the law regarding
| Government deposits in banks has been
changed. A debate on this question
would be altogether wholesome, and
would probably deter any other Secre-
! tary from oYerstepping the limits
marked for him by. Congress, and serve
! as a warning to other officers of the
Government not to take such liberties.
1t would be wise step, also, for Con-
gress to inquire how the Secretary
came to change his mind so suddenly
after announcing that no proposition
would be considered foE taking other
security than United States bonds for
Government deposits. Such inquiries
cannot be considered disrespectful to
the head of the Department. Congress
addressed similar inquiry to Secre
tary Boutwell, when he paid out few
millions of greenbacks that had been
redeemed and cancelled in pursuance of
law by Secretary McCulloch. The mo-
tives Of Mr.. Boutwell, were not ques-
toned in that case, nor are those of
Mr.. Shaw impugned in any degree
now.-New York Evening Post.