The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1912-11-24
M'vflGH SAYS
TAKE TREASURY
OUT OF BANKING
fcontinued From FIRST Pa.SeJ

10 cash, they must at once reduce theii
liabilities by S4,o.ooo.ooc. This meant
that they mus reduce by an amount
thsar loans to the business community
with the volume Of bank credit NOV.
ing In the reserve critics four times a
fast a. the volume OF cash ano
throughout the country ten times a.
fast Is the volume OF cash. II is plain
that the machinery OF credit is ex-
tremely sensitive to variations in the
amount Of cash held by the banks. For
this reason. an institution like the
United States Treasury, alternately &C
sumlating and disbursing many mil
Ions of cash. 10 likely 10 create wide
spread distu pance in the money mar
ket
The funds held by the great Euro
pean governments vary from SIS. l0o.-
Oa0 to $50, 900, 0uo. 600. The coin. bui-
lion and paper money held as assets
in the United - es Treasury during
the present administration has varied
from $500, 300, l0e to $35o.OV0.eeJ. In
other words, nearly one-tenth OF all
the money in the country IS held Idle
an the Treasury vaults. If this money
were ali deposited in the banks. IL
would increase their reserves 20 per
cent
HoardinE BY Unele Sam.
The receipts and disbursements OF
the Treasury are most irregular. The
Treasury receipts in 1897 exceeded the
disbursements by $?l,eoo.oee. TWO
years later the disbursements exceed
ed the receipts by sIiS,0ot,0oS. For
the past two years receipts have again
exceeded disbursements. The general
fund in the Treasury was $2'2.oeo,e"o
In 1897: three years later It had fallen
TO sl06. 100000. Under our present sys-
tenn Of keeping a large surplus gov
eminent fund idle in the Treasury
these wide variations in the yearly
balance not only seriously disturb the
money market and the business OF the
country. but force the Secretary OF the
Treasury to enter actively into the
money market as a paternal oVerseer
of the machinery of credit.
1t not tnfrequently happens that sur
plus revenues accumulate in the Treas
ury just at a time when the banks are
straining their resources to grant all
the credits needed to finance a husl-
ness boom. The Treasury then taxes
money out Of the banks and boards 1t
lust at the time when the country most
needs H. II the business boom goes so
far as to strain creS!: 20 the breaking
point. then the Treasury must come
TO the relief Of the sftuat !on.'' by de-
posting some Of its boarded cash in
the banks. In recent years the Treas
ury has been carrying a large surplus.
and IT has been IN a position to re-
1fsve financial tension by dePositins
funds in the banks. In December. 1907
following the money panic. the special
deposits in the banks by the Treasury
had reached s.ss.e1o.05o. Three years
later they were reduced to $4.eoo.o)1.
II the fiscal year -eUs-ia19 the Treas
s-v withdrew sloe.eoo.eao from the
eanks.
Secretary Has Dangerous Power.
Tht. state Of Affairs places In the
hands o. the Secretary OF the TreasurJ
power greater than any American
should have. The power OF the
Secretary TO influence the money
rarke. by deposits OF with
d-swals Of public funds is al
WAYS dangerous. No government. ON
Ger should have this power. II has
been a great burden. believe. On the
shoulders OF every recent Secretary OF
.ha Treasury Department
II the people realized how dangerous
Is the power n the hands % the Secre-
sary Of the Treasury. they would in
sist that the Treasury be at once take n
out of the banking business Accus-
toned as We are to government inter
ference with the money market. few
Of US realize bow the Treasury IN the