The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1913-05-01
Fiscal System RevOIutioniZed
by Order Issued by Sec
rotary McAdOO
MORE MONEY FOR
THE DEPOSITARIES
Secretary of the Treasury Will Charge
: Per Cent on All Government De
posits After June plan viii Earn
Over S1,O00,00 Annually.

WASHINGTON. May / - The fiscal
system of the United States governing
deposits of federal funds in national
banks was revolutionized yesterday by
Secretary NcAdoo of the treasury de
partment, with an announcement that all
government repositories, whether active
or inactive, would BE- required to pay
interest at the rate of per cent per
annum, beginning June 1. upon deposits
of the government. Simultaneously with
this action. the secretary authorized an
immediate increase of St0.000OOO in
government deposits in the national
banks, making the total So. $40 ,964,
from which the federal treasury will
earn. under the new interest order. ST.
053, 900 annually. There are indications
that Secretary McAdoo intends to release
still more surplus money from the treas
ury vaults and place il in general circu-
lation through Increased deposits with
the nat lonal banks I'm statement last
night. he said:
With the banks paying interest on
government deposits, the secretary may
he justified in keeping larger balances in
the national banks, thereby increasing the
volume OF money IN circulation and to
that extent reducing the amount locked
up in the treasury" Mr. AIcAdoo also
announces radical change in the char
acter Of securities which the treasury de-
partment would accept for government
deposits. Instead OF requiring that the
national banks secure treasury deposits
exclusively with United States or proein-
cial government bonds, they will be al
lowed in future to secure 20 per cent
with government bonds and the remain
ing 30 per cent with high-clasS state
city or county bonds, acceptable To the
secretary of the treasury, To Ike :alen
as security at II per cent Of their mar
ket value but not to exceed par
This Is the first time in history that
the treasury department has called upon
the banks to pay interest on what are
known as active deposits, OIL accepted,
except in periods OF financial stress, Sc
curity other than government bonds Ac-
tive depositarIes are those which conduct
a checking account for the government.
cashng checks of the discussing officers
and replenishing their authorized govern
ment deposits from customs and internal
revenue receipts deposited with them.
There are 500 inactive depositaries. each
holding 81 600 OF government funds. Up
on these deposits which are not disturb
ed by checking accounts the government
has drawn two per cent interest for the
past five years. These are the only gov
eminent accounts which ever have earn.
ed interest
For Years there has been agitation
in and out of Congress to assess the ma
tional banks interest on their government
deposits. This invariably has been resist
4 ed by previous administrations of the
treasury ON the theory that the bank,
with active accounts performed mucl
clerical work for the government Tn,
House committee on expenditures in tn,
treasury department at the last session
investigated the question and recommend
ed that the secretary of the treasury b,
required to charge interest for the u.s.
of the governments money.
Secretary McAdoo last night declare,
that he did not anticipate any scriou
resistance on the part Of the banks to tn
new policy. If any bank was dispose,
to surrender its account by reason Of tn
order he said that there were many 9th
crs willing to take it up.