Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-10-07
DEPOSITS OF MONEY
Treasurer Roberts History of
Government Funds.
STATE BANKS USED
CHANGE.
Various Acts in Regard to Distribution
Of Money Until Establishment Of
Independent Treasury.

The attention which is now given in
| finance discussions generally to the policy
of depositng public money in the national
| banks lends interest to the study of that
subject in it's historical aspects, which Ellis
States. made in preparation for his annual
| report.
| Robert Morris, the financier of the revolu-
| ton, Mr.. Roberts finds. carried the burdens
| of the war for independence by the aid of
| banks organized for the purpose. and of
| private capitalists. From the start the
| national government used the banks. at
| first for loans and later for deposits. This
was true Of the Bank of the United States,
which held the public funds until Presi-
| dent Jackson transferred them to state
| banks. In report made to the House Of
| Representatives by Mr.. Baldwin, member
| from Georgia, 1874, the early situation is
thus depicted:
THE treasurer keeps the public moneys
under his control in the several banks. He
has never any public money in his posses
sion or custody which is not, in fact, de-
posted in bank from the moment his pos
session or custody commences till 1t ceases
| by the disbursement of 1T for public pur-
| poses. except in the case of bank bills, or
| ders upon Individuals, etc.
Mr.. Otis Report.
| The subject was often before Congress-
| and another report was submitted in the
| House of Representatives. January %, 1901,
| by Mr.. Otis of Massachusetts. referring to
| that of Mr.. Baldwin, and adding: 1T does
| not appear that any objection has ever been
made to the form of doing business speci-
| fed in that report, or that the committee,
after most ample and elaborate investi-
| cation of the regulations adopted in the
| department, entertained doubts of the judi
| cOuS and competent nature of the arrange
ment and distribution of the powers and
duties of the officers. The department 1t
| self is organized by law and its method
| of doing business is so devised as to afford
| the most perfect security from the miSap-
| plication of the public moneys.
Secretary of the Treasury Woodbury.. De-
cember IL, 1884, in supplemental report
| discussed deliberately the keeping OF the
| public funds. His purpose was to assert the
| power of the Secretary of the Treasury TO
| remove deposits. then partisan question
| but his utterances have permanent value
| In regard to the places for keeping the
| funds of the United States it Is believed
| that under our first organization OF COM
| mon treasury, no such places were ever
| designated by law, unless sometimes the
| loan offices, and unless, for such funds as
| were wanted in the field, the military
| chests accompanying the army may be SO
| considered. The residue of the funds is
| supposed to have generally been deposited
| for safe keeping as the committee of Con-
| gress when having charge of them or the
| treasury officers, when such had been ere
| ated were pleased to direct; and 1t Is well
known that by them banks were selected
for this purpose soon as any were IN
corporated in convenient places, under
either state OF federal authority 5' =
President Jackson's Action.
President Jackson's removal of deposits
was from one bank with branches to many
separate institutions but always to banks.
Mr. Roberts states. The rage for the pur-
chase Of public lands led to the creation or
banks which might issue notes to be used
in the required payments to the govern
ment Deposits in the banks were. June 30,
1896, carried up to $39.0Sl,14I. an immense
sum for those days They reached $45co6,-
SS3 in December. 1886, but the lower sum
had proved a temptation to the states to
| ask for the deposit with them. Congress.
| by act of June D. 1886, voted TO make TINS
| distribution in four installments of all
moneys in the treasury, except $1,0O,OOO, to
! the states on the formal pledge of their
| faith for repayment These installments
| were paid to the states, when the govern
| ment found its necessities forbade further
| distribution. and the policy was stopped by
| act of October B. 1897, which also provided
| that the funds already deposited should
| rected by Congress-" So they remained
| there to the amount of S2S.1Ol .644.91, and
are carried on the books of the department
| as unavailable funds.
The Bank of the United States had passed
| away, and the pet banks were causing
| President Jackson hardly less trouble than
| the offensive central institution had done.
| The distribution to the states under the act
| of June %. 1886, was to begin with January,
| 1S47.
| The drop in the balance in the treasury.
! as well the deposits in banks was phe-
| nomenal-to $6,SU4 1913 in the combined total
| in 1927 An of panic swept the
| country due to the speculation. fastened by
| the efforts to check that evil. The public
| funds were low. President Van Buren's
! suggestions for an independent treasury.
| made law July f. 1910, and lasting only
| until August -. 1S41, were followed by va
| rious schemes, which left the funds in chief
part in the banks. The passage of the act
of August 6, 1885, created the independent
treasury system practically as it stands to-
day, and brought the public moneys into
the immediate care of the treasury. and
from 1S47 until 1864 the banks held no
share of them. From that time forward
I such depositaries have held varying
amounts. attaining the maximum at SiO2-
37O,130 during the bond transactions April
%. 1879. and now again. June 80. 1903. at
147.S42.610. By October l they were $751;
77S,2S6
Interest on Deposits.
In the earlier days the government re-
ceived no interest on it's deposits. but the
act of June 3d. 1886. made this requirement
upon the conditions recited:
Section II. Whenever the amount of pub
lie deposits to the credit of the treasurer of
the United States in any bank SHALL for a
whole quarter. of a year. exceed the one
fourth part of the amount of the capital
stock of such bank actually paid in the
banks shall allow and pay to the United
States, for the use of the excess of the de-
posts over the one-fourth part of its capt.
tal an interest at the rate of 2 per centum
per annum. to be calculated for each quar-
| ter upon the average excuses of the quar-
ter; and 1t shall be the duty of the Secre-
tary of the Treasury, at the close of each
quarter, to cause the amounts on deposit in
each deposit bank for the quarter to be ex-
amined and ascertained. and to see that all
sums of interest accruing under the provis-
ions of this section are, by the banks re-
spectively passed to the credit of the treas
urer of the United States in his accounts
with the respective banks
The drain upon the banks due to lower
balances in the treasury resources cause
some friction, and Congress sought to offer
palliation by an act of October Is, 1897, en-
titled IAN act for adjusting the remaining
claims upon the late deposit banks" In
the early days services and accommodat lions
rendered by the banks weer treated as con-
sideration for the use of the depos is placed
by the government. Facilities for the pay
ment of customs by importers also were
0tofo pfC Of ftn