Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1913-05-14
SPECIAL WASHINGTON CORES
SSg$ VII PONDENCE. 55s i

SPECIAL WASHINGTON CORES.
PoNDENcE.
By Congressman Clyde n. Tavenner.
Washington, May 1.-THE order
OF Secretary McAdoo that national
banks after June 1st must pay two
per cent interest on government de-
posts is the start Of what will
Eventually be a great saving to, the
American people.
The order follows closely the
recommendations Of a special House
committee which investigated the
government repositories last year
This committee, dominated by dem
ocrats and headed by Representative
J. Henry Cooke, Of Ohio, reported tc
Congress fragrant examples Of specia
privilege in the distribution Of fed
eral funds among banks.
The report was available to the
Taft republican administration sever
a, months before it went out of of
flee, yet Secretary MacVeagh paid
no attention to it.
The report showed that in 1905
the number Of federal repositories
had grown to / ,436. These banks
were divided into two classes about
1000 of them temporary repositories
the rest regular repositories.
Bort sorts Of repositories were ere
ated arbitrarily by the Secretary Of
Treasury. In the temporary deposi
tory the government usually placed
the sum Of 81, 900. The Treasury De.
partment never disturbed this sum
Before 1908 the. temporary deposition.
les were not required ! to pay inter.
est. In 1912 they were required to
pay two per cent. :33si IA 5
Having this $1,000 on deposit, the
bank was permitted to print /" Gov
eminent Depository on its windows,
its stationery and advertising matter
In other words, the republican ad-
ministration entered into an advertis.
ing scheme pure and simple with fav.
ored banks paid two per cent on
81, 900, or 500 per year, a3s
All the revenue the government got
cut, of it in our years was $6sS, 4O7.-
rs.
On the other hand, in the 400 or
so regular repositories, the govern
ment has kept funds which have tot
aled as high as 5000, 900. On
this vast sum the Treas ury has new
or collected a dollar Of interest.
And the Secretary Of the Treasury
could give the money to whatever
banks he chose to favor. . Il:
The committee estimated that in
26 years the government, by not col:
lecting two per cent on this money,
lost $36, SOC, 1923. NJ rs Il. 4
Moreover, the republicans have al
ways kept in the Treasury a. ID; sum
far in excess Of the amount needed
for a working balance. AT times
this excess has equaled $65, 900, 900.
Had this excess been out earning two
per cent 1t would have brought SAT-
610,86O to the treasury in rs years
Thus this single instance of re
publican favoritism and special priv
ilege, has cost the people over $685.
900, 600. .s..
Ssno 70 81 n A FOL a
first step in correcting a great abuse
o. power. But his order will be
only beginning. Representative
Cooke comes from Ohio where there
is compulsory dository law. The
state treasurer, instead of using his
own discretion, in designating banks
to receive public money, advertises
for bids, and the money is deposited
with banks willing to pay the high
est rates Of interest on it, giving
small country banks opportunity to
use these funds.
Under this law Ohio is getting an
average Of 3 1-2 per cent interest on
state deposits. Z .E4. ;.5 VI
Mr.. Cooke has introduced in the
House similar compulsory and
competitive law. The action Of Sec
rotary McAdoo in going. to his legal
limit in following the recommends
tons Of the committee indicates that
he will favor the Passage Of fed
eral compulsory depository law
Such a law will be a great revenue
producer, win end favoritism, and
viii give all banks, the great city
institution and the small town bank
alike, according to their assets 9
chance to receive government depos-