The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-03-02

varying between e1S000,00O ana w.
100000 a month, may be deposited In
National banks scattered over the country
on payment Of interest by the banks OF
not less than w per cent per annum.
Government collections Of internal revenue
are now deposited In this way, save that
interest is not enacted upon them and that
Government bonds are required as se-
curity for them. Secretary Shaw's action
In allowing the substitution Of other Sc
curities than Government bonds was, OF
course, a temporary proceeding. In addi-
ton, the theoretical eject OF the new law
will be to release from the Treasury the
large amount of Government bonds now
held against Government deposits and
to allow these bonds to become
the basis of increased bank circu-
lation. But practically this effect viii
only be felt moderately. The result
Of the Wholesale release OF Government
bonds in the manner indicated would be
to depreciate greatly the price OF these
bonds in the open market; and TINS
Is something that the Secretary OF the
Treasury would take care should not hap
pen. The Aldrich bill invests the Secre-
tary OF the Treasury with large discretion
in the entire matter. He can insist upon
Government bonds alone as security Tor
public deposits and he can require banks
receiving public money to enlarge the
volume or alter the character or the securi-
ties deposited by them As he pleases. The
Secretary would undoubte 'ly require banl
asking for Government deposits TO keep
a good proportion OF the security deposited
with the Government in Government bonds,
and he may very likely make a condition
precedent to the substitution to any great
extent Of other securities than Govern
ment bonds that the banks making the
substitution should take out circulation
upon the Government bonds handed back
to them. This the banks WIFI not be over
willing 10 do, as the Aldrich bill contains
no provision for the retirement Of circula-
ton at any greater rate than the present
volume Of 100000 month, and hanks
arr thus forced to stand the risk of keeping
out circulation at a loss. Many OF the
Government bonds now held in the Federal
Treasury as security for public money
have been borrowed from private instl-
tutions and individuals who cannot Use
the bonds when they receive them back
again as a basis for currency circulation.
II is quite improbable. therefore, that
all the customs payments will find their
way into the banks or that there will be
any very extraordinary increase in hank
circulation. II must be borne in mind,
on the other hand. that in case a
the failure of the Aldrich bill to be-
come law the Secretary of the
Treasury can to a certain extent do as Inc
did last winter and allow the substitution
OF other security than Government bonds
for Government deposits to be made. II
would he little awkward for the Secretary
to do this in view Of the now generally
expressed conviction that under the law
as il stands action Of this kind Is not strictly
legal. Nevertheless. the Secretary could
and would take this action II it was neces-
sary. and public sentiment would sustain
him.
The most important event last week in
its bearing upon tho future financial and
indust rial situation would have been the
decision Of the Supreme Court Of the
United States in the lottery oase~, bringing
UP the question Of the extent to which
Congress has power over interstate
commerce. ~ the opinion OF tho court in
the matter had been clear and decisive
But the opinion was not clear and decis We.
The Court was divided as closely as it could
be, and Justice Harlan delivered the
majority opinion. In one part Of
his opinion Justice Harlan seems to
hold. broadly that Congress has plennry
power over all interstate commerce and
csn regulate and prohibit II pretty nearly
as 1t pieases; elsewhere the Justice seems
to hold that all that the court passed upon
was the simple question o. ae right OF
Congress IN prohibit comm, o in lottery
tickets. The Constitutionali,y, therefore.
Of such measures as those proposed by
Mr.. Littlefeld and Attorney General Knox
must BE- considered as still unsettled
DANIEL r KELLOGG