Dewey County advocate. [volume] (Timber Lake, S.D.) 1910-1913, 1913-05-09
OEPOs|TAR|ES MUST
PAY j. 5. INTEREST
AFTER JUNE TAX OF 2 PER CENT
WILL BE REQUIRED ON
FEDERAL FUNDS.
TO DISTRIBUTE MORE MONEY
Secretary McAdoo Announces Change
High Glass State, City or
County Bonds Now
Good as Security.

Washington, May 2-The fiscal sys-
| TEN of the United States governing
deposits OF federal funds in national
banks was revolutionized by Secre-
| tary McAdOo of the treasury depart
| ment with an announcement that all
government depositaries, whether ac-
tive or inactive, would be required
to pay interest at the rate of two per
cent per arlum, beginning June l.,
upon deposits of the government.
Increase is Authorized.
simultaneously with this action the
secretary authorized an immediate in
crease of 100000 in government de-
posts in the national banks, making
the total $52,649,964, from which the
federal treasury will earn, under the
new interest order, Sl,053,000 annu-
ally.
There are indications that Secretary
McAdoo intends to release still more
surplus money from the treasury
vaults and place it in general circula-
ton through increased deposits with
the national banks. In a statement,
he said:
with the banks paying interest on
government deposits the secretary
may be justified in keeping larger bal
ances in the national banks, thereby
increasing the volume of money in
circulation, and to that extent reduc-
ing the amount locked up in the treas
ury."
Radical Change Announced.
Mr.. McAdoo also announced a radi-
cal change in the character of s9curi-
ties which the treasury department
would accept for government deposits
Instead of requiring that the nation
al banks secure treasury deposits ex.
clusively with United States or pro-
vincial government bonds, they will
be allowed in future to secure 20 per
cent with government bonds and the
remaining 30 per cent with high class
state, city and county bonds, accept
able to the secretary Of the treasury,
to be taken as security at Is per cent
OF their market value, but not to ex-
! coed par.
This is the first time in history that
the treasury department has called up
! on banks to pay interest on what are
known as active deposits, or accept
ed, except in periods of financial
stress, security other than govern
| ment bonds.
Active Depositaries.
Active depositaries are those which
conduct checking account for the
government, cashing checks of the
disbursing officers and replenishing
their authorized government deposits
from customs and internal revenue
receipts deposited with them.
There are 900 inactive depositaries,
each holding 81 900 of government
funds. Upon these deposits, which
are not disturbed by checking &C.
counts, the government has drawn
two per cent. interest for the past
five years. These are the only gov
eminent accounts which ever have
earned interest.
| For years there has been agitation
in and out of congress to assess the
national banks interest on their gov
eminent deposits. This invariably has
been resisted by previous administra-
lions of the treasury on the theory
that the banks with active accounts
| performed much clerical work for the
government.
| The two per cent. interest charge
will be based upon the average month
ly balances of the governments &C.
count in each depository, payable
January 1 and July l of each year.
The $10,O00,000 yesterday ordered
transferred from the treasury vaults
to the national banks will be distrib
uted over the country.