The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1908-02-07
Cortt|ysu Is Criticised Severely
Upon His Methods
.FAVORITISM SHOWN BANKS
Senator culberson Declares the secre-
tary Loaned Too Much Money to
Certain Banks and Issued Ger
tificates unlawfully.

Washington, February ga financial
speech by Senator Culberson of Texas
and the passage of a bill providing for
a government exhibit at the Alaska u
kon-Pacific exposition. were the chief
features of interest in the proceedings
of the Senate today,
Mr. Culberson gave the results of his
analysis of the recent report of the Sec
retary of the Treasury on the Panama
canal bond issue, in order to substan-
tiate his contention that national banks
of New York city were unduly favored
by the secretary in the disposition of
public funds and had violated the law by
issuing these bonds.
The last hour of the day was devoted
to a further consideration of the bill
TO revise the criminal laws of the United
States and at 4:8 p M, the Senate ad-
journed until next Monday.
Senator Culberson declared that the
Secretary of the Treasury by his report
to the Senate had raised an issue of fact
as to whether national banks in New
York used the $75,0OO0O0 of public money
deposited with them lor speculative pur-
poses, or whether this money was used
to meet the demands of outside banks
for reserve purposes.
Mr. Cu1berson complained that the
committee on finance had failed to take
any action on his resolution directing
that 1t inquire into the cause Of the re-
cent financial stringency. He declared
that the report of the Secretary of the
Treasury. hsd shown that that olfieiaI had
Violated the eiaw in issuing the Panama
bonds. because money for the canal was
not needed, and that he had violated the
law in awarding these bonds to national
banks instead of the individuals and in
using the proceeds of the sale for the
purposes set forth in the report and not
for the construction of the canal.
In issuing the per cent certificates,
the secretary violated the law, Mr.. Gull
berson said, because they were not used
as provided for by the statutes, as there
were ample funds for such purposes.
Moreover, he said the secretary had, vio-
lated the law in issuing the per, cent
certificates as the law limits the basis
of such notes to registered bonds of the
United States and to Panama bonds. He
had also failed to distribute this money
as provided under the act of March A.,
1907. His distribution was inequitable,
said Mr.. Culberson, as the money was
used by New York banks for specula-
tive purposes.
Money Deposited.
1.-THE public money deposited in the ma
tional banks of the United States,' said
Mr.. Culberson, ION March %, 1907, was
$40 200, 900. On December the amount
reached the enormous sum Of 1923, 900, 900.
In New York city alone on March 22 the
amount on deposit there was s14,0O0,0OO;
on August %, s2S,OOo,oooo and on Decem-
ber 8, $75,O00OO0
New York city, with about one-sixth
of the capital and surplus of all the
banks, secured one-third of all the pub
lie money on deposit. The eastern states
including New York, have only about
three times the capital and surplus OF
the southern states and were given four
times as much of the public money.
"The increase of government deposits
in the eastern states from August to De-
cember 1907, was s54. ,000 and the in
crease in deposits in southern states was
$7,0OO, 900.
"The increase of government deposits
in New FORK city alone from August to
December was s47O0o,O00. or three-fifths Of
the entire increase of $79,0OO.000.
"The state of Texas, with 4,000, 900 of peo-
pie and a banking capital and surplus Of
$40 900, 900, compared with Washington, ID
c., with a population of 100000 and banl
capital and surplus of SS,7@,00, got but
ST. 72S 900 of the public money distributed
December 3, while Washington got $4,
| 5S1, ,000."
Mr.. Culberson charged that the report
of the Secretary of the Treasury con
tanned a denial of some of its own state
ments. 1.-The Secretary of the Treasury
he said, says in effect that $25, 200 OF
specie held by the New York banks ant
| $4,000, 900 of reserve was used to meet the
call of outside banks whose reserve tht
| banks OF New York hold, whereas the re
| port of the secretary shows clearly tha
| the amount which the New York city
| banks owed all other national banks de
| creased between August 2 and Decembo
| 3 only $40, ,S2051l and it is significant tina
although the New York banks did no
| pay to the banks out side of that cit,
/ more than this $1O,S20,511 they increased
| their loans and discounts during the sam'
! time $32, 100000"
Mistake Somewhere.
| Mr.. Culberson exclaimed:
| II want these figures to ring in th
/ ears of the American people"
| Continuing, Mr., Culberson said:
| "rhese figures show tat while thi
| panic was on and while individual de
| positors were clamoring for their money
| while the New York banks were issuin
| clearing house certificates, while the out
side banks were demanding their reserve
| the national banks of New York in
| creased ..ieir loans and discounts b,
| $6s coo, O00.''
| Where Loans Went.
| Mr. Culberson declared that a part o
| these loans and discounts went to stool
| brokers.
"a letter." he said, received by mi
| this morning from the Comptroller of TIL
| Currency informs me that notwithstand
| ing the crisis between August and Decem
| Der. the loans and discounts of tht ma
tional banks of New York city wefe in
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